FY03 results slides

1
AXA Market Entry in India a case studyTim
ThomasChief Operating Officer, Bharti AXA Life
JBC Australia India Summit 2008 Melbourne 20 May
2008
2
Todays presentation

• AXA Asia Pacific Holdings
• India Life Insurance market and the India
  consumer mindset
• Bharti AXA Life today
• AXA India market entry journey
• Key lessons when evaluating India market entry

3
AXA Asia Pacific GroupRegional profile

• Illustrative value of inforce 1

Illustrative value of new business 1
Operating Earnings 1
AXA Asia Pacific Holdings operates in Australia,
New Zealand, Hong Kong, Singapore, Indonesia,
Philippines, Thailand, Malaysia, China and India
(1) As at / 12 months to 31 December 2007
4
AXA Asia Pacific GroupFinancial performance

• Profit after tax, before investment experience
  and non-recurring items, up 12 to A604.8m

Operating Earnings up 20 to A543.7m
5
Asia Overview of Operations

• India
• JV (AXA APH share 26) with Bharti Enterprises
  to access the Indian life market
• Commenced operations end of August 2006
• Total premiums A18m
• 77 branches in 66 cities
• Over 13,000 agents and advisers

• Hong Kong
• AXA APH share 100
• 4 in new business, 3 in inforce
• Total premiums A499m
• Funds under management A10.3bn
• Winterthur integrated
• Citibank distribution agreement

• China
• JV (AXA APH share 25) with Minmetals and AXA SA
• Top 10 for new business amongst foreign life
  insurers
• Total premiums A33m
• Operations in five cities Shanghai, Guangzhou,
  Beijing, Foshan and Shenzhen

• Philippines
• JV (AXA APH share 45) with the Philippines
  largest financial conglomerate, Metrobank Group,
  with 544 branches
• Top 5 in new business
• Total premiums A47m

China

• Thailand
• JV (AXA APH share 50) with Krung Thai Bank -
  leading government bank with over 766 branches
• 7 for new business
• Total premiums A72m

India
Hong Kong
Thailand

• Indonesia
• JV (AXA APH share 80) with Tempo Group
• JV (AXA APH share 51) with the largest bank in
  Indonesia, Bank Mandiri, with 928 branches
• Top 3 in new business
• Total premiums A128m

Philippines
Malaysia
Singapore

• Singapore
• AXA APH share 100
• 7 for new business
• Total premiums A88m

Indonesia

• Malaysia
• JV (AXA APH share 49) with Affin purchased
  Tahan Life to access US4.2bn Malaysian life
  market through 81 branches
• Operations commenced in September 2006
• Total premiums A2.8m

• Asia (ex Hong Kong)
• Total premiums A390mn
• FUM A3.9bn

Apart from market shares (latest available),
figures are as at/for the 3 months to 31 March
2008
6
AsiaOur Strategy
Our vision

• To be the preferred provider of financial
  protection and wealth management products

Strategy

• Achieve a leadership position in each of our
  markets by the time they enter the
• growth phase
• Provide a comprehensive range of financial
  protection and wealth management products to mass
  market, mass affluent and corporate customers
• Deliver superior performance by applying AXAs
  global best practices to multiple distribution
  channels
• Gain early mover advantage for wealth management
  and financial planning
• advice services
• Drive profitable growth through a single regional
  platform

7
Todays Presentation

• AXA Asia Pacific Holdings a brief Asia profile
• India Life Insurance market and the India
  consumer mindset
• Bharti AXA Life today
• AXA India market entry journey
• Key lessons when evaluating India market entry

8
India at a Glance

• 2006 Population 1.1bn, growing at 1.4 per
  annum
• Size Seventh largest country by area, 40 of the
  size of Australia
• 2006 GDP A1,102bn ranked 13th
• 2006 real GDP growth rate 9.0 (2nd fastest
  major growing economy first being China)
• GDP per capita A985
• Total life premium (as at March 2007) A49bn
• Life premium growth (Mar 2006 to Mar 2007)
  64.8
• Life premium as of GDP (y.e. March 2007) 4.1
• Population mainly rural with 60 residing in
  villages
• Expected to be the worlds 3rd largest economy by
  2050 with a GDP of A34 trillion (Source Brics
  Report Goldman Sachs)
• Services sector comprises 55 of GDP with
  financial services contributing 14 of GDP

9
Overview of India - Macroeconomics
India is projected to experience a GDP CAGR of
8-10 over 2007 to 2011 (1)

• Strong GDP growth of 8.6 over the last 4 years,
  the 2nd fastest growing economy in Asia, in which
  AXA is present
• interest rates have reduced by 350 Bps from 11
  in 2000 to 7.5 in 2006 based on 10 year
  government bond yields
• Lower inflation and interest rates coupled with
  higher savings resulting in investment led growth
• Growth in India is domestic consumption led
  unlike other Asian economies which are export
  driven
• Forecast to be worlds 3rd largest economy by
  2050 with a GDP size of A34 trillion, below
  China only (Source BRICS report, Goldman Sachs
  2007)
• Strong earnings growth of Indian Companies with a
  5 year CAGR of 24.9 for Index stocks, driving
  stock market performance

GDP Growth
CAGR 2001-07 7.3
CAGR 1980-2001 5.6
3 year average
Source Reserve Bank of India
Note(1) Source Citigroup, Lehman Brothers
10
Overview of India - Macroeconomics
The savings rate in India has increased from 24
in 2001 to 32 in 2006

• The savings rate is still lower than China at
  about 50 and similar to HK 30 and SEA between
  20 to 30(1)
• Increasing affluence among middle class
  population with per capita income increasing by
  7 over the last 5 years, is leading to huge
  increase in households with discretionary
  spending power and savings ability
• Increase in savings rate has happened despite
  interest rates reducing by 350 Bps from 11 in
  2000 to 7.5 in 2006 based on 10 year government
  bond yields

Source Reserve Bank of India
Note(1) Savings as of GDP. March 2007 Watson
Wyatt report
11
Overview of India - Demographics
The wealth of general population have increased
with average per capita income increasing by 7
to A985 per year in 2006

• Young population with a median age of only 24
  years. Approximately 55 of the population is
  expected to be wage earning in 2013
• Population below poverty line is declining
  sharply with the population earning below A3K
  reducing from 80 of the population in 1995 to
  lt50 currently
• Mass market customers called Aspirers, earning
  between A3K and A6K, would be the largest class
  by 2012 comprising 45 of the population by 2012
• Despite large stock market gains in the last 3
  years, Indian households continue to invest their
  savings in bank deposits, approximately 55 of
  savings, while investment in life insurance is at
  approximately 19 of savings

Globals (Agt29K)
Strivers (A15-29K)
Seekers (A6-15K)
Aspirers (A3-6K)
Deprived (Alt3K)
Source Reserve Bank of India, McKinsey
12
Life Insurance market in India
Life market continues to display strong growth
due to strong growth drivers

• Life insurance market in India is A49bn and is
  the 2nd largest in Asia (ex-Japan) in which AXA
  has a presence
• Though penetration of life premiums has increased
  from 1.8 in 2000 to 4.1 in 2006, (low as
  compared to HK 9.5 and SG 6.6 (1)), Indians are
  still significantly underinsured with per capita
  premium of only A41. Penetration is forecast to
  increase to 6 by 2012.
• Life market growth remains buoyant 95 growth
  for the year ended March 2007 to A49b,
  significantly higher than initial estimates of
  20 at the time of market entry
• Key drivers for growth are
• Large but young population (1095m people, median
  age of 24.9 years)
• Strong GDP growth of 8.6 over last 4 years
  expected to continue
• Significant increase in household savings as a
  of GDP
• Indian life insurance market is forecast to grow
  by 17 p.a. and reach a size of A100bn- A120bn
  by 2012 - McKinsey

108
94
CAGR 17
81
69
57
49
CAGR 27
31
24
19
16
15
Source IRDA, McKinsey
Note(1) Penetration rates. 2006 Watson Wyatt
report
13
AXA Life Outlook Index The Indian customer a
new found confidence

• Launch of a comprehensive Life Outlook Index
• Identify current life satisfaction
• Forecast level of optimism and outlook towards
  life across Asia
• Provide an industry measurement and benchmark for
  forecasting consumers life and financial
  management needs
• Give insights on consumers attitudes towards
  life given current socio-economic factors
• Survey of mass affluent population (top 25-35 of
  the population) aged 25-50 in each market
• Sample size of 2,400 across the region
• Conducted using online and face-to-face
  interviews in August 2007

• China (Beijing, Shanghai, Guangzhou)
• Hong Kong
• India (Mumbai, Delhi)
• Indonesia (Jakarta)
• Malaysia (Kuala Lumpur)
• The Philippines (Manila)
• Singapore
• Thailand (Bangkok)

14
Current Life Satisfaction

• Mass affluent Asians are generally satisfied with
  life currently 49 are satisfied on regional
  average
• India and the Philippines stand out as the most
  satisfied markets while the more developed
  markets of Hong Kong and Singapore show the least
  current satisfaction

CN HK IN ID MY PH
SG TH

Regional Average Satisfied (Current) 49
Base All respondents
denotes less than 0.5
15
AXA Life Outlook Index overall future outlook

• Asians are generally optimistic about their
  outlook on life over the next five years
• India, China and the Philippines are the most
  optimistic in the region

CN HK IN ID MY PH SG TH
Regional Average Life Outlook Index 71.6
India 87.2
Philippines 85.0
China 75.1
Thailand 74.3
Indonesia 69.9
Hong Kong 67.7
Malaysia 66.2
Singapore 59.2
16
Outlook on retirementGeneral attitude towards
retirement planning

• Mass affluent with the highest optimism are also
  seen to be the least prepared for their
  retirement 82 of mass affluent from India and
  78 of mass affluent from the Philippines have
  not started planning seriously or taken action
  for their retirement
• In contrast, mass affluent with lower optimism
  have been driven to better plan for their future
  retirement 41 of respondents from Singapore,
  47 from Hong Kong, and 36 from Malaysia have
  started planning seriously for their retirement

CN
HK
MY
SG
TH
IN
ID
PH








69
53
64
59
67
82
78
78
47
36
41
31
33
22
22
18
Base All Respondents
Planned seriously and taken action already
(planner)
Not planned seriously and taken action yet
(non-planner)
denotes less than 0.5
17
Outlook on retirementAge for retirement

• Most Asian mass affluent indicated they start
  planning for retirement before 40. Hong Kong,
  Singapore and the Philippines start as soon as
  early thirties however India, Thailand and
  Indonesia are relatively late starters. In the
  case of Indonesia, retirement planning is started
  as late as 49, leaving only 10 years prior to
  likely retirement

CN HK IN ID MY PH SG TH
Age
Regional Average Age starting preparation 39 Desir
ed age 58 Realistic age 59
Base Respondents who have started planning
18
Todays presentation

• AXA Asia Pacific Holdings a brief Asia profile
• India Life Insurance market and the India
  consumer mindset
• Bharti AXA Life today
• AXA India market entry journey
• Key lessons when evaluating India market entry

19
Bharti AXA LifeStrategy
India is a key driver of the Asia strategy

• We will provide a comprehensive range of
  financial protection and wealth management
  products to mass market, mass affluent and
  corporate customers
• We remain well positioned to gain early mover
  advantage as Asia moves to financial planning
• We will deliver superior performance by applying
  AXA global best practices to multiple
  distribution channels
• We will drive profitable growth through a single
  regional platform

• Our key imperatives in India to support our Asia
  strategy are
• Grow Distribution in the fast growing, under
  penetrated and less competitive Tier 2 / 3 / 4
  towns through a hub and spoke model
• Develop multi-distribution channels with agency,
  bancassurance, direct sales force and corporate
  agency / broker channels
• Leverage the large mass market Airtel customer
  base of 50m (and growing by over 2m per month)
  and distribution reach across the country (700
  Airtel relationship centres, 4000 distributors,
  800,000 retailers)
• Leverage and re-use AXAs regional blueprints,
  systems, products and business capability. Also
  leverage AXA Business Services, AXA Tech and
  Bharti Airtels telecom network to quickly
  achieve scale
• Be the Preferred company to attract and retain
  the best talent in India
• Institutionalize a customer centric culture
  through a service quality platform

20
Bharti Group a partnership of equals
60 million customers, adding 2.5 million every
month
Bharti Airtel is amongst the worlds top 10
mobile companies and the fifth largest listed
company in India
Indias largest GSM operator present in all 23
circles Covers 60 of Indian population
Amongst worlds 10 best performing companies by
Business Week IT100 2nd Best Employer - Hewitts
Best Employers Survey
5th largest listed company with market
capitalisation AUD 51bn (April 30, 2008)

21
AXA Group a partnership of equals
Stated aim to be amongst top 5 in every market
Present in over 60 countries with 52 million
customers
120,000 employees worldwide
Rated No. 15 on the Fortune 500 Global list
Revenue of around Euro 94 billion
Leading Insurance Group in the world Fifth
largest global asset manager
22
IndiaNew business index and operations update
There has been a rapid expansion of our footprint
since the launch of our national operations in
December 2006

• 77 branch offices (2006 6)
• 13,898 agents (2006 - 631)
• Exclusive access to Bharti Airtels 60 million
  customers
• Launched presence at 308 Airtel Relationship
  Centres across over 25 cities
• Over 6000 employees
• Product range to cater to diverse consumer
  segments Term, Anticipated Endowment, ULIPs
  (Single Premium and Regular), Pension
• Launch of asset management joint venture in Q4
  2007
• Business relationship with Citi Financial
  providing access to their 4 million customers
• Several exclusive distribution relationships
• Market leading service delivery platform
• ISO 90012000 certification for operations and
  customer service
• One of the fastest in policy issuance through
  smart technology and strategic outsourcing
• A C Nielsen customer satisfaction scores one of
  the highest in AXA group

• 100 share

23
Todays presentation

• AXA Asia Pacific Holdings a brief Asia profile
• India life insurance market and the India
  consumer mindset
• Bharti AXA Life today
• AXA India market entry journey
• Key lessons when evaluating India market entry

24
AXA India Market Entry Journey
Market entry phaseology
Pilot and national launch H2 2006
Market scan Q2 2004
Target business model H2 2004
Partner evaluation JVA H1 2005
Market entry plan regulatory
approvals Q3 2005 to Q2 2006
Post launch Review Q2 2007
25
Todays presentation

• AXA Asia Pacific Holdings a brief Asia profile
• India Life Insurance market and the India
  consumer mindset
• Bharti AXA Life today
• AXA India market entry journey
• Key lessons when evaluating India market entry

26
Key Lessons
India is a dynamic market which offers market
entrants opportunities to develop new
competencies and insights

• Be clear on business model before selecting a
  local strategic partner
• Complimentary strengths
• Similar mindset and strategic objectives
• Value-conscious retail consumers and strong
  competition across most income demographics makes
  scale critical
• Invest in brand and deep-reaching distribution
• Develop scaleable systems, processes and
  implementation partners
• Different mindset required to fully tap the
  growth potential in the smaller semi-urban and
  rural towns
• Understand the underlying economics and consumer
  behaviour of small town India, take a longer term
  view
• Multi-channel capability is important to address
  heterogeneous customer segments
• Pan-India players require strong regional
  structures

27
Key Lessons
India is a dynamic market which offers market
entrants opportunities to develop new
competencies and insights

• Prepare for complex challenges in managing talent
  given the broad range of options for the young
  professional class
• Dynamic and rapidly evolving market
• A phased market entry approach with evaluation
  checkpoints
• Requires flexible operating model and nimble
  execution capabilities
• Think large - start small scale fast
  prepare to re-design basis new capabilities
  developed from the market
• A clear long term vision and strategy, strong
  governance model and quality platform will win a
  long term competitive advantage

28
AXA Market Entry in India A case studyTim
ThomasChief Operating Officer, Bharti AXA Life
20 May 2008