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Executives

Etienne Bouas-Laurent – IR

Mattieu Rouot – IR

Henri de Castries – Chairman of the Management Board

Denis Duverne – Member of the Management Board

Gerald Harlin – Chief Financial Officer

Kevin Molloy – SVP of Distribution Finance

Analysts

Unidentified Analyst

Nick Holmes – Nomura

Farooq Hanif – Morgan Stanley

Blair Stewart – BofA Merrill Lynch

John Bam (ph) – ING

Johnny Vona – Goldman Sachs

Duncan Russell – JPMorgan

AXA Group (AXA) Q4 2009 Earnings Call February 18, 2010 10:00 AM ET

Etienne Bouas-Laurent

Good afternoon to all of you. Thank you for coming to AXA’s presentation on full-year ’09 results. It is a special day for Investor Relation, because today is the – it’s the first presentation for my successor Mattieu Rouot, and I guess consequently the last one for me. I will hope you will be more bullish with him than you have been with me. Unlike me, you have to know that Mattieu loves difficult tricky questions addressed at anytime.

Mattieu Rouot

Thank you.

Etienne Bouas-Laurent

More seriously, presenting today will be Henri de Castries, Chairman of the Management Board; Denis Duverne, Member of the Management Board; and Gerald Harlin, Chief Financial Officer. A Q&A session will as usual follow the presentation. Henri, the floor is yours.

Henri de Castries

Thank you, Etienne. Good afternoon, everybody. I would like to thank Etienne, despite the fact that he has not managed you – managed to convince you to buy the stock. We are now going to see if he is able to sell products to the clients, which is probably as difficult as what he has been doing over the last years.

More seriously, our earnings, how would I characterize them? I would say solid earnings as well a contrasted year. A contrasted year, because it ended better than it started not only for the economy but also for us; contrasted year, because we have seen as you will see a good resilience in the revenues and the operating earnings, but with some movements in different directions. A solid year, because where you look at where we end, we end with solid years, a very strong balance sheet, and a reasonably confident view into the future.

Where do we stand? Revenues down 3%. It’s coming mainly come from the Life and Savings activities and the Asset Management, Property and

Casualty was still up. If you look at the reasons for which Life and Savings were down, clearly the year has been contrasted, because the momentum was way better in the second half and especially in the last quarter than in the first half. I think what we have seen at the heart of the turmoil is a very significant flavor of riskier version among our clients who have progressively come back to a higher risk appetite. And another important thing to note nevertheless is the fact that redemptions have been going down very significantly, which leads to very significant net inflows, despite the fact that revenues are down in Life, cash flows are up. I think it’s a sign of the strength of the brand. Increase new business value, Denis will comment that in more – into more of the details. But I think this is also a good sign of the resilience of the Life activities.

Underlying earnings slightly down when compared with last year. Two different movements; one of the them which I think is an answer to those of you who are fearful about the intrinsic quality of our Life operations, a very strong rebound in the earnings capacity of the Life operations, especially in the US, where I think we have managed the issues we had in invaluable entities. This is partly offset by the decline of the earnings in Property & Casualty, where we have had exceptional natural events and some impact of the recession on the claims. This is going to – we think improve in the – in the years to come.

The net income is moving – sorry, I am moving to the next chance, because Etienne wants me to move to page – is it a good one, yes, page seven, I was trying to be discipline. But – so on the Property & Casualty the combined ratio is deteriorating, but we have the feeling and Denis will elaborate on that that the corrective actions we have been taking are going to bring it back to lower levels. But remember what we had said was that we would operate in Property & Casualty between 95% and 100%. We are always in the range and we are very confident that it’s going to stay like that and move into the other direction. So net income is multiplied by four, coming to I would say a sort of coming back to sort of more normal situation even if we are far from the peak earnings we had in 2007. This is I would say the reflection of the strong asset quality, following the very exceptional things we had seen in 2008.

The next point which is an important one is the solvency situation of the Group and the quality of the balance sheet. Solvency is back to pre-crisis levels due to what, due to the quality of the earnings, nearly 20 points in terms of solvency, due to the impact of the markets, and also of course slightly held by the rights issue we did to finance the acquisitions at the end of last year. But I mean even without that, you can see that the solvency ratio is a very, very strong one under Solvency I. If you look at it under the Solvency II QIS4 you will see that it’s even stronger. But that building is down significantly, also slightly helped by the rights issue, but even without the rights issue, it’s significantly down, which is showing you what we have always said, but what not all of you were believing which is that the balance sheet is a very strong and safe one.

This is leading us to propose an increase in the dividend. We are going to propose at the shareholders meeting to pay $0.55 a share, it’s nearly 40% increase. It’s the bottom of the I would say payout range we have from 40% to 50%. It’s 40% -- what we intend to do is to payout the 40% of the whole normal adjusted earnings, that’s where we – that’s where we are. This leaves us the capacity to I would say finance a small acquisitions if needed. This increase is a sign of confidence into the future. Last but not least, of course, the Group embedded value has increased by nearly 15% -- 50% sorry, driven by the earnings and driven also by improved market conditions. So as you see in the numbers both on the earnings side and on the balance sheet side, after a very contrasted year, a solid situation which is we think is offering a good basis for the future, and I will ask Denis now to comment on the details of the earnings.

Denis Duverne

Thank you, Henri. I am going to talk about the activity and the earnings and I will let Gerald comment on the balance sheet and the embedded value. So first is what we call a resilience business activity. You see on slide 12 that our revenues for the year are down 3% and 1% on a reported basis. The decline came from Life and Savings and Asset Management. On the Life and Savings side, you see that our revenues went down 4%, which shows some acceleration in the fourth quarter, because after nine months, we had a decline of 6%. P&C declined just from the 1%, which is a reflection of the beginning of a pickup in prices. We – this 1% we have a 0.5 point of price effects which should translate into a higher number in 2010.

Asset Management down 25%, that’s clearly the pure reflection of the decline in the AUM, and it’s therefore essentially a market effect, plus the impact of negative flows, but the bulk of it is market effect. When you look at it by region, you see that the Mediterranean and Latin American region has the biggest increase at 13%. This is almost entirely due to the very strong volumes that we had on the Life side in our JV with Monte dei Paschi in Italy. France had the second biggest increase at 11%, showing the resilience of the French Life market and our growth in that market which was a higher than the market, especially on the Group Life side. And finally, North America was down 32%, this is essentially the decline in our VA sales, VA and Life sales in the US, which I will comment further on later.

Net inflows on the Life side 8.6 billion, an increase over 2008. What is striking here is that in spite of declining revenues, we have increasing net inflows and this is a reflection of lowest of under rates during the course of 2009 in the US and also in many other territories. On the P&C side, more than 1 million new contracts, essentially new contracts in retail, so roughly 1 million in Motor and little over a 100 million – 100,000 sorry in Households. I mean this is a good news and bad news, because in Motor, our prices for the year were flat and therefore clearly insufficient, and this is something we are going to address in 2010.

On the Asset Management side, we had negative inflows of 71 billion. More than 50 billion of that is at Alliance Bernstein and mostly on the institutional side. And this is clearly the lag effect of the investment performance issues that we had in 2008, 2009 our Asset Management saw a very strong investment performance especially in value and fixed income. And as time goes on, we should have a some pickup there. We saw almost flat flows on the retail and private client sides in the year, last two quarters of the year. We should see a some pickup during 2010.

New business value was up 5%, in spite of a declining APE minus 11%. Again on the APE side, you see that the second half was a much better than the first half minus 3% versus minus 16%. The improvement in the new business value is a combination of a better business mix with the impact of the repricing in the US and higher protection sales in the UK, slightly offsets by – partly offset by lower unit linked in France and Belgium. This we have a 2 points favorable market impact and this is offset by a negative expense leverage as reduced sales volume were not fully mitigated by a reduced expenses.

Moving to the earnings now, underlying earnings as Henri indicated were down 6%. And you see that this is a combination of lower earnings in P&C and Asset Management, largely compensated by higher earnings in Life and Savings, and I will comment on these each of those elements. We see also good earnings on the international insurance side with a growth of 54%, largely due to good performance in our P&C (inaudible) of portfolios. On the Life and Savings, the pickup in earnings is largely due to the improved by variable annuity hedging margin which I will comment further later.

On the margin on assets, we saw a decline of 0.5 billion euros. Basically we had lower investments income of a roughly 40 basis points. We don’t believe that this is going to carry on in 2010, but clearly our investments rates in ’09 were lower, and we also had some – I mean we couldn’t fully translate that into a lower crediting rates on the – on our policyholders. On the expense side, there is a small pickup in terms of expenses of 2%. But the bigger impact is the acceleration of DAC amortization as a higher technical margins in the US led to a higher DAC amortization.

To put to the spotlight on the US, you see that the US underlying earnings went from a minus 225 million euros to plus 545 million euros. We had a better situation on the hedge margin which is at the bottom left of the slide where we almost have eliminated the basis losses. We still have significant volatility losses because volatility in ’09 remains at a fairly high level. We are going to address that in ’010 by implementing what we call the volatility tool where we basically take the clients out equities when volatility goes above a certain level, having been able to show over the past several decades that when volatility is above a certain level, the investment performance is certainly bad. We have practiced it that for quite a longer period, and the investment (inaudible) for the policyholders would have been much better that’s why.

We saw also a turn in the credit spreads. We – when credit spreads is another flavor of basis risk, because basically the policyholders who are invested in credit portfolios, which were hedged from an interest rate standpoint, but not hedged from the credit standpoint. The spreads compression that took place in ’09 made that a positive number versus a negative number last year. So basically our hedging – our hedge margin was close to zero against 455 million negative last year. We took a number of actions in ’09 as you know, repricing and restructuring our VA product range, but also eliminating an important feature in our Life products, no-lapse protection rider which was responsible for part of our decline in sales in ’07 and ’09, because this is a feature that is considered important by some of our advisors and policyholders. This led to an improvement in our new business margin in 2009. This new business margin would have been much improved if we had had higher sales, but as you know our competitors were not as quick as we were to reprice the products, and therefore that has put us in a slightly more difficult market position.

We have launched in December and are going to launch in Q2 a new VA called Retirement Cornerstone, which is a product where we have a rollup rates which varies according to the 10-year treasuries, and we believe that this product is good for the policyholders, because it protects them against inflation, it’s also good for many hedging standpoints. We also have in the Retirement Cornerstone and all the feature which is that the customer can choose between the protected part of this portfolio and the unprotected part of the portfolio with different fee structures. And we are also going to launch a new Universal Life product in more competitive in 2010. That’s all for the US. So, lower sales, but better, better risk adjusted margins going further.

On the P&C side, our earnings declined by 30%. I would say this is the – perhaps the negative piece of news in this earnings release. Our P&C combined ratio stayed up to an acceptable level of 99% in ’09. But our loss ratio is shot up by 3.7 points to 70.9 points. A part of it is due to weather events, the cloud storm in France and Spain, rain in Switzerland, floods and frost in the UK. And you should expect much natural events in the P&C insurance company, but we had more than our share in natural events in 2009 and significantly more clearly than in 2008.

The current year loss ratio excluding the natural events was at 1.7 points. This is something that we need to address through pricing and segmentation actions. And we are (inaudible) of developments which were still quite positive in ’09, fairly comparable to ’08. In spite of those positive result development, our reserve ratio, so our reserve premiums – our reserves to premium ratio remain flat at 187%, which means that we are – we remain conservatively reserve overall. We also saw a decline of our investment income, a same thing as what we saw on the Life side where our yields suffered by roughly 40 basis points, and we have positive tax run-offs.

I was talking about prices. We are increasing average premiums in 2010, more in commercial lines than in personal lines, but clearly we have to do it to bring back our current year loss ratio in line with I would say value creating position for the company. You can see on the – at the bottom part of the slide that price increases are the highest in the UK and Ireland, and the lowest in Germany. But everywhere we are increasing prices quite substantially, and in a number of places, slightly ahead of our competitors.

On the Asset Management side, we saw a decline in earnings of 41% as our revenues declined by 25% and expenses only by 14%. Having said that, we have going forward a positive expense leverage, because our year-end expenses are geared to our year-end assets and any pickup in assets during 2010 should translate into significantly a more positive earnings. The average AUM have stabilized. In fact, at the end of ’09, we have AUM which are higher than the average AUM of the year which is the opposite of what we had at the beginning of last year. 2010 probably it is to address our client outflows, concerning our strong investment performance at the AllianceBernstein and managing performance at XIM where we have some investment expertise where we had not good investment experience in ’09. We need to continue to broaden our client base and AllianceBernstein plans to leverage all the sources of revenues starting new investment expertise as Peter Kraus has indicated recently in his conference call.

Moving to adjusted earnings, adjusted earnings were down 8%. There are two moving parts or three moving parts in this move from underlying to adjusted. The realized capital gains were roughly the same around 700 million euros. Impairments were much slower in ’09 than in ’08 to minus 1 billion versus minus 2.7 billion. You could be surprised to see such a big number in impairments in ’09, most of that was taken in the first half, I mean close to 700 million in the first half. And the improvement in the equity markets in the second half led to higher unrealized capital gains on equities, but not to lower impairments as you know because once impaired always impaired. We had an increase of unrealized capital gains of 4.2 billion and we continue to have some impairment of fixed income assets in the second half.

Net income almost quadrupled. This is essentially a function of the tightening of the credit spreads. The widening of the credit spread led to a minus 1.5 billion last year. The tightening led to plus 1.1 billion euros this year. I don’t think I need to comment lots of the other lines other than the negative impact of equity derivatives for minus 400 million. The bulk of that is the hedge that we have put in place in ’09 to protect our US statutory balance sheet. This protection was costly, but we didn’t want to have been in a position to have to re-inject money in the US and we didn’t have to. And last – the other line I wanted to comment is exceptions over discontinued operation minus 200 million. 142 million of that is a deferred tax liability on the potential sale of Australian business, where even though the sale of Australian business is not certain, it’s more likely than not. And therefore we had to book reserve for the difference between the tax book value and the accounting net asset value.

I will hand over now to Gerald for the balance sheet. And I want to thank you for listening to me.

Gerald Harlin: Good afternoon. Let’s start with the Solvency I ratio, which is back to its highest levels, we are 271% compared to 127% one year ago. When we exclude and that what is in dark blue, when you exclude the unrealized capital gains on the fixed income, we are back at a level which is closed from the one of the – of the end of ’06. We are excluding gains, unrealized gains on the fixed income at 154% compared to 161% in ’06, which was the highest ratio ever for Solvency I ratio at AXA.

So on the right side you have the key drivers of changes. Starting first with the underlying earnings, plus 18 points, then the financial marketing parts and plus 21%, mostly equities and fixed income with slight negative contribution from real estate and other derivatives. Capital increase plus 11 points, 9 points corresponding to the rights issue and 2 points to our share plan. And we have a negative contribution to this change in Solvency I from ’09 dividend $0.55 per share minus 6 points. On the bottom right, you have the solvency to ratio, which is calculated based on QUIS 4 methodology. And last year we were at 150% roughly and we are around at 185% at the end of ’09.

When moving to the shareholders’ equity, this – the shareholders’ equity moved up by 8.8 billion. And on the right hand side you have the main changes, starting first with the evaluation of unrealized capital gains. And on the bottom left you have the change the illustration of the net unrealized capital gains broken down between equities and fixed income. And you can notice that we’ve had minus 4 in ’08, moving up to plus 4.7 in ’09, which roughly 2 billion in equities and 2.7 billion in fixed income. So as a whole, it’s variation of plus 5 billion, then we have the net income for the period 3.6 billion. And we have the capital increase including share plan plus 2.4 billion, then the ’08 dividend minus 0.8, $0.40 per share, and the pension deficit minus 1 billion mostly roughly 0.6 coming on the UK and 0.2 from Switzerland, and it’s due to the decrease in the discount rate as you know (inaudible) has principles, we are using a AA (ph) paid, and the tightening of the spread explains that pension deficit widened.

The net financial debt went down by 4.1 billion from 17.7 billion to 13.5 billion. And the debt ratio explains mostly by the 2 points for rights issue, the positive effect of the 2 points for rights issue and share plan, and the 2.1 cash proceeds from the equity market hedgings that we mentioned already at the end of June. As a consequence, the debt ratio is going down quite significantly. We are 26% at the end of ’09 compared with 35% at the end of ’08. We are back – we are even below end of ’07 level. And you remember that at the end of June, we were at 31%. Interest cover went slightly down from 8.5 times to 7.9 times. This is explained by our EBITDA which went down by 7% in line with our underlying earnings, while the consolidated financial charges remain roughly flat.

The invested assets, you can notice that there is – there are no major changes since end of ’08. Fixed income up slightly higher at 81% and cash is down from 8% to 5%, this is explained by two reasons mainly. First, we have lower collateral coming from the VAs due to the improvement in the markets. And second, we have a loan we have invested part of our cash in longer duration bonds. You can notice that Govies and related went from 34% to 38% and government bonds from 35 points to 36 points. So we can say that we have benefitted from a resilient asset evaluation.

In second half most of the asset classes went up, except real estate and private equity which stabilized. Starting first with ABS, which is asset-backed securities, asset value slightly improved from 69% at the end of ’08 to 70% at the end of ’09. Then as far as the real estate is concerned, we had a negative 6% mark-to-market in the first half and we stabilized over the second half of the year. As far as alternative investments are concerned, private equity went down by minus 15% for the whole year. And it was minus 13% mark-to-market in the first half, so second half of the year – in the second of the year, we had a decline of 2% only. Hedge funds, positive performance, roughly plus 5% for the whole year.

At the bottom of the slide, you can notice that we mention here the present market concern on Govies and government bonds from Portugal, Greece, Ireland, Italy and Spain, you have the figures here. You can notice that these – the percentage of our assets invested in these countries is small. Focusing on Portugal, Greece and Ireland it’s 1.4% of only of our invested assets.

On the EV, so we – let’s be clear, we are speaking here from a traditional EV and no more from the CFO for all methodologies, so that the traditional methodology, let’s be clear. So we are moving up from 18.6 million to 30.4 billion, plus 11.8 million. The operating return is – explains plus 5 billion, i.e., plus 27%, 27% operating return. The investment expense is plus 4.4 billion, mostly explained by equities, plus 2.8 and lower spreads, tighter spreads 1.7, capital increase plus share plan plus 2.4 billion, so dividend minus 0.8, and Forex and others are 0.9. It should be mentioned that our Group EV benefited from 2.6 billion liquidity premium, i.e., 30 basis points for most – for the euro, that was 50 basis points one year ago. And one year ago the contribution to EV was 4.4 billion. So contribution of the liquidity premium went down from 4.4 billion to 2.6 billion. I would like to mention also that the equity volatility assumption are spots value.

Okay, I should be precise on the facts that what I call traditional EV is exactly same methodology as the ones that we have been using in ’07, but I believe that you recognize our figures, so it’s absolutely consistent.

Henri de Castries

Thank you, Gerald. And you see that again despite being all very concentrated in his new job has not lost his reactivity.

So what’s the outlook? 2010 environment, what are board elements? First, I mean the – microeconomic environment remains uncertain, where are the equity markets going to be, what’s the yield curve going to be, where is the volatility going to be, overall, until we are reasonably confident there. The regulatory framework is going to move. You know what’s going on with Solvency II. What I want to say again here is that we think that both the speaking of a system is a good system. The issue is the quality of the tuning. The parliament has defined the framework. We think that the supervisors and the commission have to stay within this framework. It’s like a medicine. I mean you have very good medicines, but if you don’t respect the prescriptions they can be bad. So we think Solvency II is a good prescription, but provided it’s respected which in 99.5 one-year horizon, not more, not less. And we think that the good quality players should benefit from that.

We see the trends for the insurance industry are not bad overall. Savings rates are high in Europe, going up in the US and in the emerging world. The risk capital is progressively coming back, and the clients are looking for guarantees, they should be good in the long run for our business. On the P&C side, we have really the feeling that the P&C cycle is bottoming up, is starting I mean comeback. It’s clear in this market in the UK, we think it’s starting to be visible in the French market, so we think the Property & Casualty should move. Another point to I would say counterbalance what I said on solvency, it’s clear also that insurers are not banks. The – if you look at the pure insurers they have gone through this turmoil with no significant liquidity or balance sheet issues. So we don’t see why the sector would need additional capital. You may need, I mean you might need some additional capital in some branches for some very specific risks. But overall why would you inject more capital in the sector which didn’t need additional capital in the turmoil.

Well are actually starting from given this background, well we think if you look at what’s going to drive the most important thing at the end of the day which is clients and revenues, we start from a strong position. We are now the leading brand in insurance by all measures. This is the strengths and I think you have stopped to see the impact of that on redemptions as an example, but also on possible and say deals with people who are looking for privilege partners. When I mean some institutions are looking for partners to be their providers, we are I think one of the names showing up quite high on the list. I would add to that that the quality of service as perceived by the customers and despite the crisis has been going up. So it’s a strong basis. You can add to that the fact that from a financial standpoint, it’s now absolutely clear that the balance sheet is strong, we have not asked for money coming from the state which puts us in a situation where we have also flexibility we need to, I would say, drive our strategy fully independently, which I think is a good thing, it’s not the case for everybody, I mean the ones who have to deal with the commission or whoever do not have the same flexibility. So it’s a good basis even if the landscape remains slightly uncertain.

What are our priorities? Priority number one is to optimize further the margins in the various business lines. We want to continue to improve the new business margin on the Life and Savings side. We think that the progress, if the gradual return of risk appetite should lead our clients to go for more unit linked products with better margins, we hope it’s going to start to happen in 2010. The – that’s clear. On the – sorry, on the Property & Casualty side, all the efforts are going to be put on the improvements of the combined ratio, and especially on the improvement of the guarantee combined ratio. As Denis told you, we have a recurring capability of – I mean extracting bonus (ph) because we are opening the years in a very conservative way. But if you look at the current year combine ratio, it was too high, we want to drive it down as quickly as possible. And as you have seen we have already started to implement the measures both on pricing increase and claims management which should help us to do that.

On Asset Management, priority number one is investment performance. Priority number two is cost income ratio. Strategically how do we want to have the business mix evolve? Of course, the major markets are still going to be the bulk of the business, because most of the accumulated growth in the world is still three. But if you look at where the growth is accumulating now, where are the places where you find both growth and profitability, it’s clear that we need to improve the exposure to emerging markets. What we had started to do before the crisis, what we will continue to do if we, if we manage to implement the Australian deal, the contribution of the high growth markets will significantly increase, it will represent on the Life side, 10% of the APs and a quarter of the value of the new business, which is really no insignificant. On the Property & Casualty side, it will represent 12% of the revenues which is also significant with the combined ratio which has improved steadily.

We will continue I mean what we had said we would do. We are buying out or we have bought out the minorities in Central and Eastern Europe. We are entering the Romania market which is one of the large markets in Central Europe. So you see we are continuing what we had said we would do. The next point which is an important point for me, we want to continue to adapt the organization to support the growth and to extract the – what I would call the efficiencies of scale which you can see in a Group like – which you can see happening.

We have now created the two new jobs Group Life, Group P&C respectively held by Chris Condron and François Pierson, because it’s a way for us to streamline the operations in these two business lines, to accelerate the reuse of the best practices, to simplify the organization to avoid having to invest two or three times differently to achieve the same goals. Technically on the P&C side, we think it’s going to help too. It’s a way for us to increase the competencies of the teams, that’s one thing. The other thing is the change in governance, where we with the unified Board we think also that the decision structure is going to be linear with the right counterbalances of course. I mean we will have vast majority of independents on the board and they will all – I mean all the committees will be shared by independents.

Last but not least, we want to continue to attract talents and we want to use very, very openly (inaudible) to attract the – I would say the very top talents from competitors who I would say did not go through the storm the way we did it. We have been – two clear examples of the fact that Jacques de Vaucleroy has been joining us from ING and that we have taken onboard the Japanese executive was the Head for Alico, the Head of Distribution for Alico in Japan. This is very interesting because it shows – it’s also a reflection I think of the strengths of the brand. But internally for executives, it’s showed that we are able to attract very, very strong people from other firms. Sometimes it’s less expensive and as efficient as M&A.

As a conclusion, we think the business model is strong. We think the activity is resilient, the earnings are solid, the dividend and the EV are showing that. So the financial performance is a good basis to look at the future. We think we have the means to make a difference in this environment. Of course, it remains an uncertain environment, of course we are not back to the glorious years of 2007, but we are quite confident that with the efforts we have been doing, we will see the Group succeeding in the years to come, and especially in 2010. This is what we wanted to share with you this afternoon. And now I think we can answer the questions. Thank you very much.

Question-and-Answer-Session

Unidentified Analyst

Yes, good afternoon. I have a few questions if I may. But first of all, I think the key points is could we have a more visibility on 2010 on several elements, first of all with regard to volumes of new business, it’s clear that there was an acceleration on the place of growth especially on Life on Q4, what do you see on Q1 ‘010 at least for January, you must have – you may start to have some visibility? And visibility also on yield on assets, what do you see going forward on 2010 compared with 2009, and given the maturation of the bond portfolio, I would say both in Life and non-Life? And visibility in terms of pricing and I would say your combined ratio, I see especially in the car segment that you are implementing some increase in tariffs of 1.5% if I am correct on your chart, and at the bottom of the presentation, we see a deterioration of the loss ratio of 3 points, so how can it manage on 2010? And I had another question with regard to hedging, what have you been implemented for 2010, and what are the related costs? And last but not least maybe what’s your view on the change of business model who I would say a higher integration like Zurich has done at the European level or where Aviva wants to go at the European level, is it something that you are looking at? Thank you.

Henri de Castries

Okay, so it’s five questions in one question.

Unidentified Analyst

Thank you.

Henri de Castries

But we will try to manage that. On the Life side, I will answer. I will ask maybe Gerald to answer on yield, Denis to answer on P&C, and on hedging and I will take the very last one. On the Life side, the – I think two of the key drivers in 2010 are going to be the return on risk appetite among the clients. Are we going to – I will say the first half of 2009 as we said was difficult because of the clients. Even if we had less redemptions, we are looking more for sort of cash or banking deposits. We have started to see that going into the other direction in the second. Is this going to be confirmed or not? That’s one of the key points. We are reasonably confident that, I would say, along the year this should be progressively confirmed, because the cost of remaining cash for investors is a high cost as you know. The second element is the US sales. As you know – as you have seen, our market share has been going down in the US, the sale have been decelerating because of the repricing. We are expecting to see the sales in the US progressively going up with the progressive launch of Retirement Cornerstone in the various networks. So this should be the two drivers, plus the fact that what we are doing in the emerging markets, the PS and a couple of other things should in our view continue to perform. So this is the framework. We will see how the economy goes, but I think the very critical factor is the return of the risk appetite. Gerald, you want to take the yield question?

Gerald Harlin

Okay. During ’09, the debt yields – as the debt securities yield dropped down by 30 basis points roughly and on average, in Life we had an accounting return of 4.5% and on P&C 4.8%. So question is at which rate we will invest? So taking into account roughly treasure rebound level today at 3.5% -- as I have shown you, we have a significant part of corporate bonds, assuming that we would invest 50% in corporate bonds. We saw spread let’s take AA or A of 120 basis points concretely that means that we will invest our 4 – at 4.1%. And you should compare, so for sure it will be at lower rates, but we have the duration in P&C of five years and Life of six years, so that means that at the extreme I can guess that the impact will be 10 basis points, something on these. So for sure, we have the impact of the new cash flow, but as a whole, it’s 10 basis points, so it shouldn’t be quite significant material for next year. I should mention also just to complete my answer that we should benefit from higher dividends on equities. Last year we had a drop of – say a significant drop of 1.2%, so as a whole it shouldn’t be very material.

Denis Duverne

On the combined ratio, we have started to implement as I indicated earlier pricing actions during the course of 2009. The full effect of that will be – will manifest itself during 2010. We continue to have pricing actions in 2010. In France, as an example, where usually we –on the retail side we increase prices in April, we did increase prices on the 1st of January this year. So all-in-all we expect that pricing action should give us between 2 points and 3 points of improvement in the combined ratio. We are likely to have less favorable developments than the previous two years, so that that’s should probably reduce that by close to 2 points. We should expect to have a 1 point from claims management, because our claims management continues to add some benefits each year. And we hopefully would have a less difficult year on the natural events, so we could expect 1 point coming from that. So all-in-all we expect that’s the current year combined ratio will improve substantially. We expect that the all-year combined ratio should be close to what we have had in 2009.

Henri de Castries

On the integration, the first comment I would make is that more than one model can be successful. I mean there is no magic recipe there. We do not want to go to sort of full business line integration. When it’s our choice, we have not waited for starting to I would say implement more rationalization and more – sometimes more transversality. If you look at the organization, we have allowed, we accept corporate solutions. It has been working very effectively since now a significant number of years. What we are doing with the P&C and the Life function is to tough to have a material structure. It’s not necessarily always easy to manage, but we think if you are a really sophisticated organization, it’s what you should try to achieve, because it’s giving more leverage to the person who is in-charge of P&C or Life at the Group level, but it does not – doesn’t franchise the local CEOs and the local distribution heads who have to stay very close to the local market practices. So we are not going to ask how is Zurich in the full integration, but we think that the model we have given the market exposure we have and given the strength of our market shares in a significant number of countries, is the best possible organization for us.

Gerald Harlin

We probably skipped on the hedging, so is it a question on the VA hedging or the kinds of the hedging? What was the question related to?

Unidentified Company Speaker

Both, okay.

Henri de Castries

So it’s six questions in one.

Denis Duverne

So on the VA hedging, as you saw, we had no losses in 2000 -- $12 million euros of losses in 2009, we have a budget of a – a small budget of losses for 2010, because we are still exposed to some potential variety losses and some potential basis losses even though it’s a – we believe it’s going to be incurred sequential. And as I indicated, we have put in place a volatility management tool which should limit the scale of those potential losses. As far as the other hedging on the balance sheets, it’s almost down to – close to zero, which we have a little bit of statutory balance sheets hedge in the US which were itself in March of this year I believe. And we will have a still a little bit of assets, I mean equity assets hedges on the balance sheets of two of our insurance entities, and it’s for a fairly small amount. So all-in-all hedging has disappeared as far as either statutory balance sheet hedging or equity – asset equity hedging.

Gerald Harlin

And you may see, the appendix has we have been gearing in equity a net gearing of 8 billion after-tax out of PB, so that’s a real exposure.

Henri de Castries

Next question.

Nick Holmes – Nomura

Nick Holmes at Nomura. I will restrict myself to just two questions, which – sorry Jean, which firstly on realized gains, I wonder what your policy is going forward? I mean this is obviously a big item in the past and you have reduced your equity exposure, I wondered if you could talk us through your equity policy, and whether it is to further deemphasize equities and reduce realized gains going forward? And then second question is on Solvency II I am afraid, which is – I mean you set out very clearly what you think of Solvency II, but I wanted to ask when do you expect some clarification on these interesting proposals that we have from CLEPs? Will it be for example before QUIS 5 that we finally get clarification on this? Thank you.

Henri de Castries

Thank you, Nick. Two very consequential questions, so the first one is for Gerald.

Gerald Harlin

The first one, for equities, you remember that before when we had make sure a larger exposure in equities we said that we should be between 0.8 billion to 1 billion contribution. Now saw a much lower exposure in equities, partly explained also by the economic conditions and they have lot of value on the corporate bonds. Our unrealized capital gains on equities is back – is only 2.7 billion. So we can expect to make some capital gains going forward, but let’s say that the contribution of capital gains to adjusted earnings should be between 0.3 billion, 0.5 billion, something like this or much smaller than that we had before for quite obvious reasons, which are that we have found an exposure in equity.

Denis Duverne

On Solvency II, I am afraid that it will take some time to get total clarification, because we will have some level of clarification in June with the instructions for QUIS 5, so we will know what the parameters will be used for QUIS 5. Then between in October and November, the insurance companies of Europe will implement QUIS 5, and the – I mean the (inaudible) ops will collect the results and provide an analysis to the European Commission. And on the basis of the results of – parameters might change again to be set finally in the fall of 2011. So there will be a little bit more clarity hopeful in June, but final clarification only during 2011.

Henri de Castries

So it’s like the weather in London, it improves gradually.

Nick Holmes – Nomura

Okay, thank you very much.

Gerald Harlin

And maybe one point that we could add on the available financial resources side, we had some clarifications that means that we are – we had some confirmations that most probably that the value of (inaudible) should be part – should be considered as Tier 1, so that’s what I can say. So we got some clarification on the resources side, but as Denis side it’s open and we are still waiting for the SER side.

Farooq Hanif – Morgan Stanley

Hi there. Sorry. Hi, that’s Farooq Hanif from Morgan Stanley. When I look at the technical margin that you made which is very, very positive held by the US, it still looks like quite a big number when you compare it to the balances. Am I getting that wrong? I mean are there any sort of one-off elements in the total technical margin that we need to take into account in our forecast going forward? That’s question one. Question two, I mean ING yesterday talked about being more conservative on lapse assumptions in its GMIB VAs because of the lower lapses coming through, can you talk about what you have done there and what risks you see? And the final question is when you talk about 2 percentage points to 3 percentage points improvement from pricing in the combined ratio, I mean that’s quite a big number to have in a year when you will sort of average increases between 3% and 5% pricing, can you still elaborate on that little bit more? Thank you.

Denis Duverne

Okay. Gerald, do you want to take the question on –

Gerald Harlin

Yes, on technical margin, yes, we had a big increase in share of roughly 1.5 billion coming from the US. Except this, we don’t have any specific one-off in our technical margin, it don’t mean that we have a significant part of our business which is protection, pure protection or protection with some savings element which makes this contribution to technical margin.

Denis Duverne

There was one exceptional element in --

Gerald Harlin

In the UK, sorry, yes.

Denis Duverne

In the UK, yes.

Gerald Harlin

In the UK.

Denis Duverne

For slightly more than a 100 million.

Unidentified Company Speaker

(inaudible)

Denis Duverne

It’s we are just back through the technical margin levels of basically.

Farooq Hanif – Morgan Stanley

Very happy to have –

Denis Duverne

Yes, we will be happy to continuing on that trend. So the ING question, we – I mean we are reviewing our lapse assumptions on the regular basis. We have dynamic lapse assumptions built in our reserves. We did take hits in the US in the last quarter on lapse assumptions for a portion of our VA portfolio called Elite, which had a five-year – I mean that – where surrender charges start after five years, and we did see some small relapses than expected in ’09. And we did strengthen our reserves by roughly $140 million – 100 million euros. So we did have. But for the bulk of the portfolio, we were pretty much in line with our – I mean – and well within our expectations in terms of a – of dynamic lapse assumptions and didn’t need to do any kind of reserve (inaudible).

And for P&C pricing, I don’t think it’s heroic as in terms of our assumptions, we do believe that the price increases that we have started to pertain in ’08 in Ireland, in the beginning of ’09 in the UK, mid ’09 in Italy, and in the second half of the year in most other countries, and 1st of January French retail sufficient to give us those 2 points to 3 points.

Farooq Hanif – Morgan Stanley

Okay, thanks.

Henri de Castries

Yes, Blair.

Blair Stewart – BofA Merrill Lynch

Thanks very much. It’s Blair Stewart from BofA Merrill Lynch. I have three questions please. And first one is a simple one, could you give us the Solvency I and the gearing figures assuming you do complete the deal in Australia? And the second question is related to the last one on VA, clearly there was a pick of business that was sold around 2000, 2001, 2002 that’s coming to the end of its 10-year period that would be significantly in the money, so what you’re thinking on not the lapse experience necessarily, but election rates on that book? And the third question is on Solvency II, we can talk about QUIS 4, QUIS 5 and whether they are even in the same ballpark, but my question is on slightly different angle and that’s the shape of your balance sheet. Do you feel that the balance sheet is too debt heavy, and even if there is grandfathering presumably that – some of that that may will need to be replaced. And I just wondered what you thought about that and how that’s shaping the way that you run the business with a view to financing acquisitions as well? Thanks.

Henri de Castries

The Solvency I, was the Australian deal completed.

Gerald Harlin

Yes roughly it would mean minus 3% in the Solvency I ratio and as far as debt is concerned it would roughly of at least 2% in term of debt ratio.

Henri de Castries

And on the VA, maybe Kevin wants to take that question, but we are – I mean we are not worried about the VA election rights. Kevin do you want to take that one?

Kevin Molloy

When we look at the election rights on the GMIB all the time and the experience for the whole back is much, much lower than we have used on both pricing and on assumptions for reserves. So we are well within the bands on the election rights assumptions for GMIB. We don’t see any need to change any of the assumptions now. Now we have some older product actually Blair, that’s originally had seven-year waiting period going back to the late 90s, so that’s been in the election period for a number of years now. So if you take all that into consideration, plus what’s coming in our well within in the expectations, we have seen little tick-up like 1% in election rates for deep in the money, but otherwise which is still well with our expectations.

Henri de Castries

Yes, it’s not as if – it’s not as if we were starting to an experience of a amortization, we – our first generation of VAs were sold in ’96. So since 2004, basically, we have – we are now in our sixth or seventh year of experience of potential amortization. We have for deep in the money policies and assumption of 15% of election rate. We’ve never been anywhere close to that.

Denis Duverne

It’s a very heavy choice for the consumer to do that, because once – I mean once the election has been made you don’t come back.

Kevin Molloy

Yes, they are much – they might – the consumer is much better waiting each year to take the election instead of triggering any given year, because he losses a death benefit if he takes the election. And secondly he starts triggering an annuity at the point in time that they elect. And so it’s much more logical for their – for them to roll it to the next year, the next year, and next year to assume the election.

Henri de Castries

Solvency II, Gerald do you want to –

Gerald Harlin

I will give you my view on this, it’s extremely premature to give nice and definitive answers about this. But keep in mind that our existing debt rate is a five quality. So as mentioned on slide – go back to slide 28 of the presentation. On slide 28, you can notice that we have 7.4 billion of debt of capital debt and 6 billion of subordinating debt, which means that we can consider and you mentioned the fact that there would be a (inaudible) that’s quite obvious. And so the capital debt at 7.4% would roughly correspond to the 20%.

Henri de Castries

7.4 billion.

Gerald Harlin

7.4 billion, sorry, would roughly correspond to the 20% we need. So you know the discussion and the way – and where the discussion is today is that Tier 1 would be – Tier 1 debt, aggregate debt would be elevated to 20% of Tier 1. So that roughly speaking that means that our capital debt would correspond 7.4 billion is roughly the equivalent. Don’t miss also that for most of the remaining part of our debt is 6 billion. It would be considered as Tier 2, we are not in the banking industry where the only objective would be to be to cover the SER we strictly and only with Tier 1. So that’s the two remarks that I could make relative to your question. But again it’s still unknown today.

Blair Stewart – BofA Merrill Lynch

Sorry, I think – can I could come back on that point? What are you including in your Tier 1 if you would say that 7 billion is only 20%?

Gerald Harlin

Well, as you know, we have in our debts out of the 13.5 billion of debts, we have almost 6 billion of TSS. So that’s subordinated – a strongly subordinated notes which are considered by the banks and maybe in the appendix you have some – on which page – I know that we have an appendix on the 42. So this is that capital so that really corresponds to the present qualification of Tier 1 debt that’s why I considered that most probably, but it’s not sure, of course, this category i.e., 6 billion out of the 13.5 billion would be grandfathered and considered as Tier 1. But it’s again – it’s premature.

Henri de Castries

But I believe Blair that’s the important points that’s you need to have in mind is the point made previously by Gerald which is critical for us and for many other players in Europe, which is that VIF is part of Tier 1 in which – if VIF is part of Tier 1 that changes the equation a lot.

Blair Stewart – BofA Merrill Lynch

How can that be?

Henri de Castries

Well that’s the indication the latest indication –

Blair Stewart – BofA Merrill Lynch

Tier 1 is defined as being immediately available to have job losses at any point in time, how can that be included within that?

Henri de Castries

This is what, this is the latest indication that we have received from –

Denis Duverne

But there is always – I mean it’s not – I mean back to what we said, the insurance industry is not the banking industry. There is no liquidity issue. If you have losses in an insurance company, it doesn’t mean you need liquidity as you know. And the VIF is the VIF I mean it’s a real value, so it can absorb losses.

Blair Stewart – BofA Merrill Lynch

It reduced by 9 billion, 10 billion last year.

Henri de Castries

Sorry.

Blair Stewart – BofA Merrill Lynch

There was a 10 billion reduction in your VIF last year.

Henri de Castries

Yes. And –

Blair Stewart – BofA Merrill Lynch

In 2008, sorry.

Gerald Harlin

Yes. And (inaudible) talking so that means that we now that there will be some volatility in the Tier 1 ratio.

Blair Stewart – BofA Merrill Lynch

Thanks.

Gerald Harlin

Always pleasure.

Henri de Castries

Okay, next one.

John Bam – ING

John Bam (ph) from ING. Just quick question, in the past, and a whole time ago now you actually gave some more color on the component parts of your Solvency II capital albeit in times of the defined capital requirement. Are you able to put sort of any ratios or guidance behind the numbers that you have given today?

Denis Duverne

I mean behind the Solvency II number which is 185.

John Bam – ING

I think the last time you gave the – for the 1987 year-end you actually gave the sort of numbers, so you could come to some ideas about how much was value enforced, how much was debt and hybrid and so?

Gerald Harlin

Yes, and maybe that’s – what we can say is that going back to my slide number 26, on the bottom right I mentioned that Solvency II ratio would move from 150% to 185%. And again the difference what I can tell you is that we have the numerator and denominator for sure. Numerator corresponding, we are under QUIS 4 methodology, I am not speaking at all from QUIS 5, we don’t do yet. But as far as the denominator is concerned that’s the requirement. And the requirement I am not extremely volatile. So it moved maybe around 10%, about 10% that year between ’08 and ’09. But what is moving is a numerator. Why? Because the numerator is the most important part is the VIF, because here we are under QUIS 4 methodology and QUIS 4 includes the VIF. And if you – if you look at the evolution of our VIF, of the Group EV – of the Group EV between ’08 and ’09, roughly speaking this explains some move from 150% to 185%, that’s what I can tell you.

John Bam – ING

Thank you very much.

Gerald Harlin

Okay.

Denis Duverne

So just to come back to Blair’s question, I believe that’s – you shouldn’t (inaudible) sides of the purpose of insurance capital regulation. The purpose of insurance capital regulation is to protect policyholders. And the reason for which we need to have capital and insurance company is to pay till last policyholder. So the availability of capital is not a question of is this capital cash now – is this capital going to be available overtime to pay the last policyholders, that’s why it makes a lot of sense to have VIF as part of that – of Tier 1 capital.

Henri de Castries

Once more, I mean don’t confuse the insurance and the banking business model, because I think this is at the core of this issue. The banks have a liquidity issue because the deposits can be exited both next morning, it’s not our case.

Farooq Hanif – Morgan Stanley

Sorry, Farooq Hanif from Morgan Stanley. I guess part of the confusion is that under Solvency II your liabilities will change. It’s a part of the current VIF is obviously representing the fact that you are not using best estimate liabilities as some of that would ultimately, so your VIF maybe smaller anyway.

Gerald Harlin

You are right. But at the same time, don’t mean that we have MVM. So market value margin for both Life and non-Life business will be significant. And it will represent the buffer above the business.

Farooq Hanif – Morgan Stanley

Okay, can I ask another question as well, actually? Well I have got the mic. You must be thinking right now, I mean I am sure you have done some thinking on QUIS 5, but you must be thinking there are going to be certain countries, certain products, certain types of businesses which you want to exit. Can you talk about that and when are we going to start hearing about you actually pruning rather than acquiring?

Denis Duverne

It’s a tricky question.

Henri de Castries

It’s a tricky question, but when you look at what we have done in 2009 in the US, you have a good (inaudible) to that, that’s a good registration of that, because what we did is we repriced to a level that was consistent with the Solvency II framework, which is not something that our US competitors were doing. And we constantly lost market share. We believe that is the right way to measure the risk, but we took a risk in doing that. And I think you – clearly one of the issues going forward is going to be the capital allocated to I would say traditional general account products in Continental Europe, and that’s the thinking that we will – thinking process that we will be going through, and I hope our competitors will be going through in the next several years.

Farooq Hanif – Morgan Stanley

Thank you.

Henri de Castries

At the back of the room.

Johnny Vona - Goldman Sachs

It’s Johnny Vona from Goldman Sachs. Just a couple of quick questions with regards to the technical margin again. I mean if I look at your technical margin in 2007 and 2008, the morbidity – mortality and morbidity margin was quite a significant lower than where it is today. I mean why haven’t we stepped up so dramatically and why is it going continue at that pace? The second question is just regards to the embedded value, it looks like you took a charge for lapse assumptions, why have you not taken the charge through your IFRS accounts? And just also at the half-year stage in terms of your debt going down by 2 billion, you said it was seasonality effects and that there was a tax receivable that would be readjusted back, have you paid back that tax receivable and what’s going on there? Thanks.

Gerald Harlin

Yes, about the technical margin, the one-off gain of the US is booked in the technical margin as we said. It’s – so that’s the mortality margin which went up so dramatically between ’08 and ’09. But what is the second part of your – did I misunderstood your question? Could you be more precise, please, Johnny?

Johnny Vona - Goldman Sachs

It’s just changed dramatically from 2007, 2008, and stepped up significantly in 2009 and going forward, are we to expect that kind of –

Gerald Harlin

Okay, will – I propose you to make a follow-up with you directly after because we gave the main reasons, we had the US, we had Japan, and we had the UK with the (inaudible) but we can – that are the main reasons, but we will follow-up with you afterwards tonight.

Henri de Castries

On the lapse charge we took both an EV charge and an earnings charge for the lapse issue that we discussed regarding the Elite portfolio in the US.

Denis Duverne

And on the debt.

Johnny Vona - Goldman Sachs

You did take (inaudible).

Henri de Castries

Yes, the answer is yes. We took it both in our first and in EV. In our (inaudible) $140 million. I think I can confirm that number. Is that –

Kevin Molloy

It was after – the number after-tax pretax was about $80 million, after-tax. So it’s taken too high for us and through technical margin.

Denis Duverne

On the debt.

Henri de Castries

On the tax point, the tax was paid.

Gerald Harlin

There is no backlog, it’s just after any payment we would have the rise of this debt.

Henri de Castries

Perhaps the one factor that was positive was we – we were able to increase the dividend coming from certain of our operating subsidiaries. Next question.

Duncan Russell – JPMorgan

Duncan Russell from JPMorgan. Could you – slide 21 on the appendix where you give the cash flows for the company. And if you look at what happened with the N minus 1 cash flows which is last year’s earnings, effectively your cash generated –

Henri de Castries

Could you please louder, because –

Duncan Russell – JPMorgan

Slide 21, I think it is of the appendix, where you have given the cash flows for the overall AXA Group. And if you look at what happened last year, where the earnings N minus 1 broadly – the earnings on a statutory basis 3.7 minus 1.8 minus the increase in the consolidated capital requirement of 2 billion was brought in zero, and I guess that’s why the dividend was cut. This year for full-year 2010, the adjusted earnings N minus 1 will also be about 3.7 billion basically flat. And I am just wondering, now we know that the increase in this consolidated solvency requirement is broadly flat, and was there much difference in terms of moving from adjusted earnings to statutory earnings i.e., the dividend being declared this year’s aren’t covered by your statutory earnings less capital requirement, please?

Gerald Harlin

Okay, I will start on saying you the question and it will be completed by (inaudible). So roughly speaking, the 3.7 minus 1.8, the correspond to the dividend that will go up from the entities. Then we have the increase in the consolidated solvency requirement, it’s exactly same thing (inaudible) and the one we described at the end of June is at in the US will move from 1% to 4% -- we moved from 1% to 4% requirement in term of Solvency I, which is – and this explains 1.5 billion out of the 2 billion. And then the capital optimization it’s mostly coming from the hedges.

Henri de Castries

The question from Duncan as I understand is more 2010, is that –

Duncan Russell – JPMorgan

That’s right.

Denis Duverne

So is the 1.8

Gerald Harlin

We can expect from 2010. We can expect from 2010. The dividends from the entities should be slightly higher and then that’s the only things that I can mention, because adjusted earnings will be – adjusted earnings minus the difference corresponding to the dividend should be slightly higher.

Henri de Castries

So the minus 1.8 should be smaller in ’010 than in ’09. You want to take the mic.

Denis Duverne

Especially because in the minus 1.8 of this year, which is a different between adjusted and statutory results, you have – we at the elimination of the hedging gains accounting wise, and which you get back in cash in the capital optimization, so next year you should in theory have a negative amount which should be lower than minus 1.8.

Etienne Bouas-Laurent

Any other question. Do we have other questions not coming from the room, but coming through the phone. No, we don’t. Any last question, no. Yes, Nick. Last one.

Nick Holmes – Nomura

Since we are all here and I hope I am not delaying things, but I just wondered whether Kevin might and perhaps talk us through a little bit more about the competitive landscape of variable (inaudible) in 2010? And whether he would be very disappointed if the market share remains at the level that it is or whether he will think that that would be the right discussion if the competitive landscape was not favorable? Thank you.

Henri de Castries

So Kevin, I am keen to hear what you are going to say.

Kevin Molloy

Nick, the best I can do on that question is you saw in 2009 that many companies changed (inaudible) on annuity pricing and benefits. That started, we started early on that. And then many companies followed to change products throughout the year. And so by the end of the year, you saw this at a rolling wave of let’s call it fire sales. And so the markets here has changed dramatically during the course of the year with (inaudible) one quarter and then falling off a bit. I don’t feel that I can really comment on market share, who is going to be more placed next year, I expect that will be have a reasonable market share, we don’t feel we have to be number one, we have a very strong distribution in all of our channels and we expect to maintain that. We have some momentum building on our new Retirement Cornerstone’s product which is a whole series of discussions which will be longer than this meeting. But I think we will see and we have seen in a number of product changes, a number of different types of annuities as opposed to just the same thing across, because the clients are looking for not just the same thing, they are looking for – some are looking for a more savings oriented, some are looking more guarantee oriented, and I think that’s going to provide some differentiation.

The other thing we are seeing is that certain market players have considerably dropped market share over the last year and we would expect they will be rationalizing the market share and maybe not playing at the same top tier level. So it’s a very confusing and moving market, but the demand is still there. Sales are lower than for the industry and for us (inaudible) lower than they were in 2008, by -- but the industry is down probably we haven’t seen the industry results, yet, but down probably 30%. And we would expect that in 2009 with as Henri said that in 2010 as the riskier version seems to have alleviated a bit that people are now looking to get back into products that have guarantees and products that have more of a savings component rather than sitting in cash. So I don’t know Nick, is that a reasonable approach?

Nick Holmes – Nomura

Yes, thank you very much.

Kevin Molloy

Thanks so much.

Etienne Bouas-Laurent

Good. At this note, I propose to adjourn the meeting. Thank you very much for your attention.

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THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

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