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Full Year Financial Results Big Year For Axa NZ

Full Year Financial Results Successful Year For Axa New Zeland

Solid business growth in key areas coupled with a significant reduction in costs resulted in AXA New Zealand having a successful year, making an improved contribution to the financial results of publicly listed National Mutual Holdings Limited.

The New Zealand operations - which incorporate Life, Health, Savings and Funds Management - achieved an audited operating profit of NZ$17.9 million for the year ended September 30, 1999. This is up 28% on the previous year.

Improved profit performance came from all sectors of the New Zealand business. It reflects increased focus on risk and funds management activities as well as product innovation over the past three years.

AXA New Zealand's after tax total profit contribution to the Group result was NZ$24.5 million, up 15%. This includes earnings on reserves.

During the year, the New Zealand business changed its name to adopt the global AXA brand. The AXA New Zealand brand has achieved a high level of customer recognition. The company also reviewed all of its products and services. This was followed by the launch of a new international equities product, the AXA Global Equities Trust, which has enjoyed immediate and strong market support. This, along with several other AXA investment products, has had top-quartile performance for the year ended September 1999.

A significant number of AXA customers took the opportunity afforded by the launch of Global Equities to migrate to higher returning products. Innovations such as this contributed to the decline of traditional savings-type life insurance, and overall total premium income declined by 2.3 percent.

AXA continued to excel in the Group Life market, improving its already dominant position while annual premium income from trauma, term, income protection and group risk insurances grew by 16.2 percent.

Profitability in the Funds Management and Health subsidiaries was up on the prior year, and success in the corporate health market, which grew by 32 percent, made a major contribution to health sales.

There has been a continued focus on expense management.

`Our management expenses are down 20 percent on the previous year, and our target of achieving an overall reduction in operating expenses of 35 percent by 2001 is very much in sight,' said Mr McEwan.

Mr McEwan also noted that AXA New Zealand is in the early stages of repositioning its business to adopt more of a customer focus.

`We are determined to exhibit and communicate our commitment to customer service. However, it takes time to make large-scale changes." He added that 1999 had been a successful year for the New Zealand business, reflecting the extraordinary efforts of staff and advisers.

`We have the right product mix for today's needs, and the importance of retirement savings is gaining greater acceptance. Moreover, the decision we made not to participate in the accident market with the privatisation of ACC, will ensure we are not embroiled in any decision the incoming Government may make in relation to how it will be administered,' Mr McEwan said.


Axa National Mutual Holdings' Improved Full Year Profit

AXA National Mutual Holdings recorded a total profit, after tax and abnormals, of $302 million for the year to September 30, 1999, a 47 per cent increase on the previous year.

The second half dividend is 4.5 cents per share 60 per cent franked, giving a full year dividend of 9 cents per share. This is a 3 per cent increase on last year's dividend of 8.75 cents per share.

Significant improvement in investment earnings of $146 million, up from $9 million the previous year, was the key driver of the result. This improvement was largely in AXA China Region.

Operating earnings for the full year were $205 million, a reduction of 8 per cent from the previous year's results of $225 million.

Retiring Group Managing Director Tony Killen said the company had focussed on two key objectives during the year: Asian expansion and restructuring in Australia and New Zealand.

"I am pleased with progress under both headings," Mr Killen said.

"The acquisition of the minority shareholdings in AXA China Region, purchase of AXA Life Singapore, establishment of the joint venture with Metrobank in the Philippines and purchase of a 25 per cent interest in the AXA Minmetals joint venture in Shanghai, significantly increases our presence in the Asian region and our exposure to the excellent long-term growth prospects the region offers.

"The restructuring of our businesses in Australia and New Zealand is progressing well. It is contributing to the continuimg cost reduction targets of the Group and its focus on the key markets of interest to us. But it has not yet delivered the revenue gains we seek and that is the continuing challenge."

AXA Australia and AXA New Zealand

The Australian and New Zealand business recorded a $163 million profit, after tax and abnormals, down 14 per cent from the previous year.

Losses in the income protection product line adversely affected the result. This was largely attributable to the continuing rise in the length of claim benefit periods, a factor experienced by the industry.

Other parts of the Australian insurance risk business contributed positively to the result while the funds management business contributed a solid $50 million operating profit.

Operating earnings generated by the New Zealand business unit of $14 million represent an increase of 8 per cent on the previous year's result of $13 million.

Operating expenses in Australia and New Zealand, after non- recurring costs (Year 2K and restructuring) reduced to $455 million. This further expense reduction brings the total to $73 million over two years toward the stated objective of $120 million by September 2001.

AXA China Region

AXA China Region contributed* $138 million to the AXA NMH profit, a dramatic increase of 340 per cent from the previous year when Hong Kong was suffering from the worst effects of the economic crisis. The improvement in performance was mainly due to the return to positive earnings on reserves.

The Group's share of operating earnings from AXA China Region increased 8 per cent to $107 million, despite the difficult economic climate in Hong Kong.

Tony Killen said: "The most exciting strategic development in AXA China Region this year was the start of our joint venture operations in Shanghai, in mainland China. Through this joint venture we are one of only four foreign companies, and the only Australian company, writing life insurance business in China outside Hong Kong."

AXA Brand

Following the very successful adoption of the AXA brand in August, a proposal will be put to shareholders at the Annual General Meeting to be held in February, 2000, to change the name of National Mutual Holdings Limited. The new name which shareholders will be asked to approve is AXA Asia Pacific Holdings Limited.

* During the year AXA NMH increased its shareholding in AXA China Region from 68.5 per cent to 73.5 per cent. Post-balance date AXA NMH has bought out the remaining minorities in AXA China Region.


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