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The line is open.
Okay. Good morning, everybody, and welcome to AXA's conference call on our activity indicators in the first 3 months of 2019.I'm pleased to welcome Gérald Harlin, our Deputy CEO and Group CFO, who will be taking you through the highlights of the release and will be very happy to take your questions afterwards.Gérald, I hand over to you.
Thank you, Andrew. Hello and good morning to all. Thank you for joining this call.As you can see from yesterday's release, AXA has delivered another strong performance for the first 3 months of 2019. Our total gross revenues grew by 3% at group level. Importantly, we grew strongly again in each of our 3 preferred segments. P&C Commercial lines revenues were up 6%, Health revenues plus 6% and Protection APE plus 5%. Our balance sheet remains very strong, with Solvency II ratio at 190%, well within our target range of 170% to 220%. You would have noticed a couple of weeks ago that Moody's changed its outlook from negative to stable. All 3 rating agencies now have us on AA- equivalents, with a stable outlook.Let me now take you through the details of the activity for each of our geographies.In France, total gross revenues reduced by 2%, impacted notably by lower sales in Life & Savings business. It was a challenging quarter for Unit-Linked sales in France following adverse financial market conditions in Q4 2018. Our Unit-Linked APE was down 24%, in line with the overall French savings market. However, with improved market conditions, we would expect to see this recover. Our Eurocroissance product in France continues to sell well, contributing to a 12% growth in G/A Savings capital -- light APE for the quarter.Overall in France, we grew in our preferred segments, with P&C Commercial lines revenue up 1%, Health revenues up 7% and Protection APE up 9%.In Europe now. Total revenues grew by 2% notably driven by a 4% growth in both P&C Commercial lines and in Health. All countries contributed positively to the growth in these lines. Life & Savings operation in Europe were impacted by our strategic decision undertaken in Swiss Group Life to shift from full-value insurance to semi-autonomous contracts, leading to a decrease of 5% in APE. Excluding Switzerland, APE in Europe increased by 7% following strong sales in Germany, Italy and Spain.Moving to Asia now. Growth in the region was strong for the quarter, with APE up 23%, 2 major trends. First, our Asian current engine are performing well, with new business strongly up in both Japan, 22% -- plus 22% APE; and in Hong Kong, plus 14% APE, due to successful protection products launched last year. We would expect some slowdown in Japan APE in the next quarters due to changing regulation which would impact one of our key products. Second, our Asia high-potential entity delivered a strong growth, mostly in China. As you know, we got some seasonality in term of new business growth due to Chinese New Year sales. Investment in NBV margin for the single-premium product is low. We also saw regular premium in protection products which is very profitable. And the overall NBV margin for China was 17% for the first quarter of '19. So promising results in Asia with an overall increase of 7% in New Business Value.Let's move now to AXA XL. AXA XL recorded a strong quarter of selective growth, with revenues increasing by 7%. Let's go through the details.Revenues in P&C Insurance grew by 16%, with higher volumes particularly in North America and International Professional lines. This includes a large contract in North America Professional. Absent this contract, P&C Insurance revenues would have increased by 10%. We also grew by 4% in Specialty, with high volumes and positive price effects in Political Risk and Energy where we remain selective in Marine and London Wholesale. Reinsurance revenues decreased by 2%, with lower volumes in Property lines reflecting reduced cat-exposed business, partly offset by increased volumes in Reinsurance Specialty lines.Price increases for the quarter at AXA XL were 3.3% in Insurance, of which 4% at XL and 2.5% at ACS; and 1.5% in Reinsurance. Pricing momentum is building across most lines. The signs are very encouraging on that front.Moving briefly to the U.S. now. AXA Equitable Holdings recorded good growth in the first 3 months of 2019 with an overall revenue growth of 5%. Life & Savings APE was up 3%, mostly from higher sales of ACS or non-GMxB variable annuity products.We also continued to be very successful in our International businesses. Total revenues were up 6%, with once again a strong focus on our preferred segments. P&C Commercial lines increased by 7%, mainly in Mexico, [indiscernible] and Turkey. Health grew by 10% on positive volume and price effects in Mexico and increased sales in the gulf.Lastly, at IM, revenues were impacted by the adverse financial market condition in Q4 '18, which combined with the less-favorable business mix led to a decrease of 7% in revenues.Now moving on to our Solvency II ratio, which as I mentioned earlier was at 190%. This is well within our target range of 170% to 220%. The change versus December 31 was driven by a number of different factors which impacted this quarter. I'll start with the negative impacts: minus 3 points from unfavorable market conditions, mostly lower interest rate; minus 3 points from EIOPA changes on both ultimate forward rate and reference portfolio weights; minus 3 from the effect of transitioning XL entities from the Bermudian equivalence to the Solvency II standard formula. Then the positives: plus 2 points of strong operating return net of accrued dividends for the quarter, plus 2 points on our latest sell-down of AXA Equitable Holdings share in March, plus 1 point linked to the Forex as euro depreciated versus main currency over the period.So to conclude. AXA delivered a strong performance in the first 3 months of the year pretty much in line with our stated priorities. First, we grew our top line overall, with particularly strong growth in all our preferred segments. Second, we are progressing well on the integration of XL. AXA XL grew revenues by 7% in the quarter, notably with discipline and selectivity in Reinsurance and with a positive outlook in term of pricing across the board. Third, the successful sell-down in March and the subsequent deconsolidation of AXA Equitable holding was key, as this means that's very much on track for our deleveraging targets.I'm now ready for -- to take your questions.
[Operator Instructions] We have a first question from Peter Eliot from Kepler Cheuvreux.
The first thing I wanted to ask on was Switzerland, actually. I guess your Swiss Life & Savings revenues were down 9% on a comparative basis, but I was wondering if you could give us the reported basis because I don't think we have the number from last year but useful to see the move. And I guess, on that, now that you've got the benefits of seeing what the initial impacts have been, I'm just wondering whether you can give us any further insights into your thoughts on what were the earnings impact and the outlook for the remaining business there. Secondly, there were a couple of areas where there's quite big swings, and I'm just wondering if you could give a bit more commentary. France Health was down 30%, you said, on the nonrepeat of exceptionals. I wasn't aware what those were, so I'm just wondering if you could confirm. Japan, Hong Kong Protection very, very strong. I was wondering if you could just elaborate a little bit on what had caused that. And Germany Motor down 5% seems quite a lot, but again, if you have any comments, that would be very helpful.
Okay. So let's start with Switzerland. In Switzerland, what I can tell you, Peter, is that remember, last time -- we said at the time we announced [ year ] 2020 that the impact would be minus EUR 20 million rough in term of earnings. So nothing penciling to that, that we are not in line with what was said at the time. Second, on Switzerland you can see that on a reported basis we are at minus 29% in term of revenues, and you can see that on Page 13 of the press release. So I could say that, as far as Switzerland is concerned, it's absolutely in line with what we expected. So that means that we transformed, as you know, our business model in Switzerland in Group Life from full value to semi-autonomous. And so retention was achieved with a retention rate of 90% of corporate customers, which was more or less what we expected. And we still expect to upstream CHF 2.5 billion in '19 -- in 2020 and 2021. So that's mostly in. On the big swings that you mentioned, Peter, and starting with France Health at minus 30%: So as you know, the revenues growth in France and -- is driven by whole business in both domestic and international market but as well as individual business. Health APE growth was very strong last year, in the first quarter of 2018. It was plus 39%, and it was mostly coming from group international business and most notably from the initiation of the partnerships that we have with Oscar in the U.S. in first quarter '18 but as well the initiation of the coverage of a couple of states in India, leading to a high comparison, high watermark with that for the first quarter of '19. So nothing -- as you know, new business from last year continues and will continue to contribute to our revenue this year. And APE, by definition, reflects new business returns during the period, but anyway, as -- we still expect to have good growth in term of Health in France and across the board towards the group. Your second question was about Japan and Hong Kong and on Protection. It's mostly -- as explained in our press release, so it's mostly coming from the savings product in China but as well as Hong Kong and Japan. In Hong Kong and Japan you'll remember that we have -- in Japan, we had a tax savings product, which was a Protection product combining protection with savings. We've been extremely successful last year, but there has been a change in the tax legislation which makes that we cannot expect going forward such a strong growth. And as far as Hong Kong is concerned, like we said, that we have really good start of the year in Hong Kong. And that -- it explained, I'm sure, the recovery of our Protection business in Hong Kong. As far as the Germany Motor is concerned, we -- as you know, there is still a -- there is a global environment which is a quite competitive environment in term of pricing. And we decided not to go along with this price competition, I could say. And we privilege our profitability. That explains why we were at minus 5% in Germany Motor. I'm not worried by this minus 5% to price back at a strong profitability.
That's great. If I could just come back very quickly on Switzerland. The EUR 20 million that you gave last year, I think my understanding was that, that was in respect of the investment spread which you would no longer get. I don't -- I understood it was sort of based on the same volume of business, so I'm just wondering if the loss of impact -- of business has had any impact on that. And on 29%, the 29% was on the total. It was the Life & Savings in particular. I'd ask it, but I can follow up with IR...
Yes. No, it's what I can tell you is that, the EUR 20 million that we announced -- I'm -- will remind you that, the profitability of the group pension business in Switzerland, it was more than 75% coming from Protection margin and not from the -- and the remaining part in the investment. So -- and the investment was more and more declining for quite obvious reasons. So underlyings. I confirm this figure.
Next question comes from Andrew Sinclair from Bank America Merrill Lynch.
It's Andrew Sinclair from BAML. And three for me, as usual, if that's okay. Firstly, just wondering if you could give us an update on timing for getting XL on to your internal model. And secondly, actually just staying on XL, I just wondered. There's no news on loss experience in the release for Q1. Q3, you gave us an update. I know this may be a slightly tougher period. Should we see no news as good news and this was just a fairly normal quarter? And thirdly, just continuing on Japan actually again. Just what proportion of business in Japan is affected by the regulatory changes that you mentioned?
Okay. So as far as the timing of XL internal model, we still are expecting to move to the internal model by the end of 2020. You know that it takes some time because we will work with the -- or we will build our internal models in 2019. And we will then advance it. And we should get it validated by the ACPR, by our own supervisor, and it will take a while. That's why it will be by the end of 2020. The loss experience of XL, I will say that, as you know, we don't comment on the claims activity for any of our entities, but I could say that overall we believe that the first quarter was broadly normal at least in term of cats for XL. Then on Japan and the -- it's roughly 30% of the activities. So that gives you an idea. And if your question is that: It's -- mostly it's 30% of APE. So meaning that it was 30% of APE and it's much lower in term of top line. And hence I don't anticipate any negative impact, as you know, on the bottom line.
Next question comes from James Shuck from Citi.
James Shuck from Citi. So three from my side. First question, just returning to XL. Gérald, I think you just said you don't tend to update on kind of profit experience in the quarter. I mean, it would be helpful to get some kind of update on XL on a more regular basis, I think, just going forward in terms of nat cats and man-made losses. If I hear what you said around nat cats, I think you said they're kind of broadly neutral in the period. Do I assume that is also the same for manmade as well? Because a number of peers have seen adverse results in Q1 largely due to manmade or of nat cat. So just keen to understand that experience at XL, please. Secondly, on Hong Kong. Hong Kong, you saw very strong growth in Protection. However, the overall margin stayed the same. Now I would have expected Protection margins to be much stronger, so just surprising not to see that coming through as an improved margin.
Okay. As far as the trend is concerned, I will say that there have been -- as you can see, there have been some manmade disasters in the first quarter of '19, notably in Marine and aviation. By definition, these manmade disasters can be lumpy by nature, and we see no evidence of a trend for the time being. And as a whole, I would say that's immaterial at the scale of our group. That's what I can tell you. And on Hong Kong, you mentioned the Protection margin and -- but no. The NBV margin in Hong Kong was quite stable because we went from -- last year, we were at 43%. Now we are at 44%. I'm referring to the NBV margin. So it's quite stable. So that means that, just in order to get such a high level of NBV margin, it confirms that the proportion of Protection is very strong. So let's be clear: Most of our work in Hong Kong is not from savings. It's quite obvious that the Protection -- APE in Protection was plus 56%. The savings is much lower and it was minus 45%. And globally speaking, it means that the Protection content, which brings most of the value, is quite strong. And just as I told you at the beginning, just focus on the NBV margin. 14 -- 44% versus 43% is satisfactory.
All right. I guess so. And just the margins on Protection would be higher than they will be on the General Account Savings product. And therefore, to see such a strong improvement in the Protection sales in the period, I would have expected the margin to have actually improved. So it hasn't, and that I don't really understand why.
Okay. No. Let's be clear. The Protection, what was important of the Protection? For Hong Kong, it's mostly Protection with savings. So on a constant basis, we did our best to limit the pure G/A Savings product because, you know that, there is a strong competition in Hong Kong and with very high illustrations giving -- presented to the plans. And we focused on protection but protection with a combination. When you have a few savings products, you have an NBV margin which is maybe 20%. And you can get this 44% only combining with a strong content and a strong percentage of protection.
Next question comes from Michael Huttner from JPMorgan.
Well done. This is amazing stuff. The first question is on leverage, and I wonder if you can give us a little bit of an update on the how -- on the progress. I mean you -- I know you reiterated that you're on track, but maybe you could say where you are at now, what you're thinking about. I'm particularly thinking about these debt tranches in XL which could be redeemed at any time, of course, with [indiscernible] period. The second is on the Azerbaijan thing. So you stopped selling and you have your reasons. That's absolutely fine, but I just wondered if there's any -- you can give us an update on how you see your -- [ that talks ] really of smaller countries. Are they performing so well that you want to keep them all? Or are you having another think? Where are we at in this process? And finally, on XL, you said reinsurance premiums in nat cat were down. And I just wondered if you could give us an update on what this means for the nat cat exposure. I have in mind that figure of 1.5 billion, plus or minus 500,000.
Okay, Michael. So let's start with the leverage. So you'll remember that, last year, we ended 2018 with a gearing ratio of 32%. We mentioned and we confirmed in November and then in Feb when we presented the last year accounts that we were expecting to be between 28% and 25% at the end of 2020. Same plan, I would say. By the end of March, we sold the equivalent of EUR 1.3 billion of equitable stock that -- which means that we will deconsolidate as soon as -- at the end of the present quarter and half year, yes. That means at the end of June. And it means that this deconsolidation will lead us from 32% to 31%. This doesn't take into account the proceeds of EUR 1.3 billion, and the equivalent would lead to 30%. And what I could say is that I'm quite happy to say that we are well positioned in order to achieve. I cannot tell you -- I said last year that we will be between 28% and 28% in case we wouldn't sell any further AXA equitable shares. If I would say the same, I would say that we would be between 28% -- 27% and 25%. That's what you should keep in mind. So clearly, it's very quick deleveraging. And I'm quite happy that -- and look what I said in my introduction, from the rating agencies. The fact that we are now at AA- confirms the strength of our balance sheet. And that's extremely happy point, this situation. The smaller countries: So as you can see, the smaller countries are behaving extremely well. And it means that the -- when you take these -- the performance of these countries, it's -- as a whole, International [indiscernible] and in term of revenues. And I will say this is mostly coming from countries like Mexico. And Mexico is doing extremely well, in Health as well; and as well from the -- from, I will say, Colombia, the gulf and Turkey. Turkey [ is clearly ] doing extremely well and it's a good recovery. So a bunch of questions relative to it didn't change. Of course, there are some very -- some strongly performing countries. And it's our intention to -- as I said 2 years ago, that this country should be managed for profit. And so long these countries are managed for profit, I have no problem and we'll keep it. So nothing changed on that side. I'm quite happy to report strong performance on 3 countries of International. Then you have a -- you had a question on each sales. And the -- I will say the Reinsurance part. And so I could say that on the Reinsurance side, voluntarily, I will say we decided to slightly decrease our exposure. As I said, what we said and what I explained just back in February about our exposure is still the same. So that means that we still look at a 4% normalized cat loads. It's still quite -- it's still valid, but I believe that on an opportunity basis we believe that we decided to reduce sales in cat-exposed Property line in Reinsurance. And it's what our shareholders are expecting from us, and you can expect us to remain disciplined in terms of underwriting going forward. It's an illustration of our discipline, but at the same time I'm quite happy to report that nevertheless we are plus 7%, which means that, as far as XL is concerned, it's clearly your focus on the most profitable line. On top of this, as I said, we still are expecting pricing changes and which is a good sign because we see pricing momentum building across many lines, which is a good news. And we are not the only one to report this. Just refer to our main competitors. It's the same message.
Next question comes from [ Jon Albert ] from Morgan Stanley.
Gérald, it's Jon Hocking from Morgan Stanley. I've got 3 questions, please. Firstly, on France. The fall in Unit-Linked we saw in the sort of first quarter, as you say, are reaction to the volatility in the fourth quarter. In your experience, how quickly does that take to reverse given we've seen very strong market conditions in Q1? And then on XL, a couple of questions. The comment that you've just made in terms of the reducing the Property cat exposure in Reinsurance. To what extent do you also have cat in the Property book? I saw the Reinsurance. And are you trying to reduce that as well? And then just finally, on XL, I just wondered what the logic was for writing a multiyear contract given what -- you seem to be going through a period of positive rate momentum.
Okay. As far as -- Jon, as far as Property is concerned, I will say that I expect that there will be recovery. Look. The European equity indices are back to the top. i.e., the -- if I coupled it what's happened in the past, there is always a lag effect. And that's why I'm not worried. And we are still expecting a significant growth going forward, so I'm really expecting a recovery on that side. I just wanted to highlight one point, which is the strong performance of Eurocroissance. As you know, Eurocroissance up to now -- and I'll remind you that Eurocroissance is not exactly a general account because it's -- you cannot surrender before 8 years. So if you surrender, you surrender at market value, meaning that you have more leeway for investing in risky assets. And really what we have been achieving is that -- you know that the government wants to develop it quite strongly because today it's 2 billion [indiscernible] France. And the ambition is to multiply it by 10. So the ambition of the government going forward, so -- and for once, we have a growth in Eurocroissance by more than 100% in the first quarter. So it highlights just the fact that we are pragmatic. I think that, when -- we are not only independent from Unit-Linked. When we have, due to market decline, some slowdown in the Unit-Linked, then we have some [indiscernible] products. And that's a good illustration. So on that side, I believe that we'll recover. On XL, I will say that this multiyear contract is just because -- we wanted to mention it because a multiyear contract is not -- I'm not expecting -- this professional contract is not a contract with -- in itself a lot of potential risk. It's not a 4-year cat contract. So it means [ you can predict ]. I just like this because, so long as we take the whole premium upfront, I said that instead of 7%, we would have been at 5%. And the objective was to be fair on the real level of growth. And so it's -- that's it, but this -- I don't have any worry at all from this contract. And I'm not expecting [ growing ] activity coming from this contract at all.
Okay. And then on the cat exposure in the non-Reinsurance part of XL?
Well, yes, but nothing specific. I believe that the global trend is the same, meaning that we try to marginally reduce this cat exposure in line with our own risk capital. That's what you can expect from us going forward. And I repeat what I said. I think that the cat environment up to now has been quite in line with what we could expect.
Next question comes from Rooq Hanif from Crédit Suisse.
It's Farooq Hanif from Crédit Suisse. Just returning to XL for 2 questions and 1 question on China. Can you just talk about some of the logic of your business mix change in XL? So I get that you -- your shareholders want you to reduce volatility, but pricing conditions, in part for property cat, are very, very good. And if you start to see the middle of the year in U.S. reinsurance renewals also good pricing, would you not take the opportunity there? So are you just on a general reduction of the Reinsurance business, or would you be opportunistic? Secondly, any comment on the further news of staff departures in kind of chief underwriting roles at AXA XL and your concern, if any, around that? And lastly, could you comment on growth in China Direct P&C now that you have 100% ownership, just what the trends are there?
Okay. So I will say that on Property, if you take the example of North America Property, roughly speaking we were at -- we were flat. So it's not a real decline. And I agree with you that the profitabilities is good, but more generally was we have been going on lines [indiscernible]. Take the example of NA construction, plus 8%. And you know that it's a very profitable line. And I could give you many example like this. On North America Professional it's the same and so on. So globally speaking, we cannot say that today -- I'll say that the price environment is improving, but I would not say that it's a strong and hard market. It's not the case yet, which means that, taking into account our own criteria in term of profitability, I would not say that the Property and the property cat business, they came together -- reinsurance and Direct insurance is at a level where we would like to increase. So I believe that we've also talk that we had some tailwinds, I will say, because the price environment is better than before, but there is nothing new. And it's not a shift in what -- compared with what we said a few months ago, not at all. We have a risk appetite. We'll speak to this risk appetite. We have some guidelines that we shared with you in term of expecting losses in 1 in 10, 1 in 20 years. And we stick to it and that's it. And despite this, we are honestly a bit opportunistic also. And we are trying to push on lines where we benefit from strong rates increase and from what we can consider as a good profitability.As far as the departures are concerned, you are referring on -- both to Convex; and to the fact that, following the setup of Convex, some people left. But it's a handful of people. We have 9,000 colleagues at AXA XL, and so a handful of people leaving is not impactful for us. And we have, every day, good people who have approached us. Presently, we are the #1 in the Commercial lines. So we are active and people are interested, and we are attracting top talents. And now I would say that, for the time being, Convex is a lower-rated business. And of course, they will be a competitor, but we are not playing on the same -- is nothing that they will have to compete with us with -- they will be down on the slips. So it's -- you cannot compare such a company with us. But to stick to your questions, Farooq. No, we are not at all worried by this handful of people leaving.And on China, let's be clear. We didn't close the business yet. So the closing will take place. That's in some ways long in China, so it will take place a bit later in the year. And so we cannot, I would say, took the lessons from our present acquisition because it's too early. So let's wait a bit. I'll remind you that our objective is still the same in China for P&C, which is to combine a strong and quite good, profitable Motor business, direct Motor business with inbound calls. In order to do these inbound calls, it's necessary to invest in adverts. And for the time being, our big shareholders -- our majority shareholder didn't start yet. And the second ambition is to develop strongly our Health business. So these are the 2 strategic domains that we're going to develop. And please wait a bit before drawing conclusion, and of course, we will update you on a regular basis on our achievements.
Next question comes from Nick Holmes from Societe Generale.
Can you hear me, yes?
Yes, yes.
Just a couple of questions. First is on XL. I wondered how the cross-sell of XL products to AXA's corporate customers is going. And then second question, on China. With ICBC, just wondered, have you got the right balance between profitability and sales? I know this has been an issue in the past. And obviously, you've made a lot of progress in the first quarter. Wondered, is there more progress that you can make to improve profitability?
Okay, okay. Thank you for your question. So cross-sell to customers. So you'll remember that it's part of our synergies, these sort of the $0.5 billion pretax of synergies. These cross-sales that you are referring to [indiscernible] represent 0.1 billion. As I said in our previous calls or presentations, it's the idea is that it will take a bit more time, whereas I'm comfortable that the synergies and that the expense synergies will be spread over 2 years. And within 2 years, we should be done. Here it will take more, let's say 3 years. And for example, this year was relatively small compared with the global objective. I can tell you that, taking into account the present right here, we are in-line. So I think that we are in line with our expectations. So quite confident. It will take time. I'll remind you that it will be spread over 3 years. So the most important part of this synergy will be in 2020 and 2021, but as far as the 2019 program is concerned, we are on track.On China, ICBC. You'll remember that we have 27.5% of ICBC-AXA. We have always -- we did our best in order to privilege profitability. Just last year, the NBV margin on ICBC was 32%, if I'm right. And as I mentioned in my introduction, for the first quarter, we are at 17%. So does it mean that it's worrying? No, no. Because -- I'll remind you that for a -- traditionally the first quarter production, the first quarter new business is Savings business, pure savings business. And then we stop the savings business to switch to more Protection. It's exactly the same framework today. Could we do more? For sure, we can do more. And could we improve the profitability? It's still our ambition to improve the profitability of ICBC-AXA, yes, but don't think this first quarter is an indication of the global profitability for the year.
That's great. Just one very quick follow-up just very briefly with the XL cross-sell plans into AXA. Can you very, very briefly just give us a flavor for the types of products that you think have potential?
Well, it's the type of product that could be sold in sometimes specialty products, without any doubt, professionals. We have SMEs, but you know that the need for D&O in Europe is always increasing. And there will be also cyber. So that's the example of the type of products that we will sell. So in other words, of course we will privilege products which are quite profitable. And so that's [indiscernible].
Next question comes from Niccolo Dalla-Palma come -- from Exane BNP Paribas, sorry.
Three questions from me. First one would be last one on XL. Could you help us with the pro forma gross earned revenues of last year just to help us with the base to start from and on which we will see the like-for-like this year as we are learning the seasonality of the gross premiums? And secondly, if I may, a question on -- back on cash actually based on the reporting of full year but taking the opportunity now. So we see in the annual report that internal loans at the holding increased by EUR 6 billion year-on-year compared to the EUR 3.5 billion of cash at hand that you use for the transactions. Could you just confirm that the intention is still to build the EUR 3.5 billion and that you don't need to rebuild EUR 6 billion of cash? Because we clearly can't see what's happening at the intermediary -- intermediate holding levels. So if you could just confirm that's the case. And secondly, on the cash from Switzerland, again in the annual report you mentioned that it will come over the next 3 years. Does it mean that some of the EUR 2 billion slips into 2021? Or is that just, let's say, the original statement reported and packed into the reporting? So you still expect the EUR 2.2 billion coming by 2020.
Okay. So Niccolo, as far as the XL is concerned, what I could tell you is that, roughly speaking, of course -- unless I misunderstood your questions, but your question was much more, "What percentage did you achieve roughly?" And what's the seasonality? So roughly speaking, I could say that, in the quarter, we did 1/3. That's what you have to keep in mind, roughly speaking. So 1/3 of the -- roughly, the annual production have been done in the quarter. Internal loans: I'll remind you what I said. So that means that it's part of the -- in other words, one other way to explain it is that, when I say that -- if we sell the totality of itself, of AXA Equitable Holdings, if we sell this -- the totality of the remaining share, then roughly speaking, I could say that the 25% assumes that, roughly speaking, internal loans will be back at the same level as before. So -- and that's a buffer that I explained before. So nothing changed on that side. So the 25% is 25%, assuming that, roughly speaking, we would be back to pre-XL acquisition with the financial situation.Switzerland cash. No, I don't expect that it will slip to -- switch to '21. I'm still expecting roughly 50% this year, 50% next year.
Next question comes from Ralph Hebgen.
Ralph Hebgen from KBW. Just one question left for me. It's a bit of a technical thing. I was just surprised to see the premiums in 1 quarter for AXA XL up at EUR 6.1 billion, but if I excludes that one contract which you wrote in North America and if you excludes the contribution from corporate solutions and AXA Art, like an estimate, maybe that gets to something like in the region of EUR 5 billion in gross premiums earned or what is basically the XL stand-alone business. And this is basically my question. If you look at the historical accounts of XL and when it was a stand-alone business, that number, the run rate, was more like an equivalent of EUR 4 billion in the first quarter. So my question boils down to seeing it looks as if there was EUR 5 billion for XL standalone in the first quarter '19 versus what I believe is a run rate of EUR 4 billion. So is there anything which you can add or explain why that dynamic occurred? Are there any perhaps translation? Is this going on as the premiums are represented under IFRS? Or was there anything else which might have inflated that production in the first quarter?
No. I believe that you have these -- as I said, you have this exceptional premium. And we will be back from 7 to 4. I will say that, I mean, this -- as I said, we represent roughly 33%. I don't believe that it was fundamentally different in previous years, but keep in mind as well that the Reinsurance part explain -- roughly speaking, you have 50% of the Reinsurance which is written at the beginning of the year. So that explains the seasonality effect. I could say that, except this, we are more or less [ a provider ], but I will say that generally it represents -- I -- yes, generally it represents maybe 25%, roughly 25% of the year. And then you have the contribution mostly of the traditional lines, but I hope that this answered your questions. We could go into more details. There is no mystery. And we can follow up with you, Ralph, on the detail of '18 and -- but honestly, there is nothing -- but there is nothing specific there. But there is the seasonality linked to the combination of the business which is more or less linear but with a quite significant share of the premium in January; and with the Reinsurance business, where clearly it's 40% of the business which is returned, roughly, in January. That's more or less the way I would explain it.
Next question comes from Johnny Vo from Goldman Sachs.
Yes. Just a couple of questions. Just in terms of obviously you're seeing some reasonable growth in the XL business, but I guess that's from a top line perspective. How should we think about the evolution of the top line translating into the bottom line? So the growth is there. How will that translate into bottom line for this year and going forward? In terms of the Reinsurance business, clearly you're obviously changing the scope of that business somewhat. Is the Reinsurance part of XL still core to the group, or is this potentially surplus to supply? And the third question is we see further liberalization in the Chinese market. I know that you've recently bought out your joint venture partner, but does this potentially change your attitude to the Chinese market in terms of opportunities?
Okay, Johnny. So XL reasonable growth, and your question is already translating into the bottom line. Just I just wanted first to remind you that we have an objective which is -- which was shared with you in November last year, which is to achieve 95% combined ratio for AXA XL, meaning XL plus ACS, plus AXA Art; and a contribution to earnings, to underlying earnings, of 1.4 billion. So we didn't change it, and I believe that we are doing everything in order to achieve it. And this plan and this top line and this evolution into one aim at achieving this goal. We consider it as a firm commitment. And so that was it. Keep in mind that, roughly speaking -- and you can make your own math, but roughly speaking, if we would more or less normalize -- because we got -- some of you asked the question in February. Roughly speaking, excluding the -- with a normalized cat loss, we had a combined ratio which was close to 99%, between 99% and 100%. That -- the improvement is all the points, all the synergies, starting, first, with the cost synergies. It's $0.3 billion pretax. And then we have also Reinsurance synergies, 0.1 billion. Then we have the revenue synergies, 0.1 billion, that we discussed before that will be -- that will go beyond 2020, but the impact shouldn't be very high. And then we have also the asset side. And as I said answering one question in Feb, we can expect to have synergies -- we -- yes, synergies improvement, I could say, improvement of 0.1 billion. So -- and on top of this, we can expect, roughly speaking, to improve to achieve the 95%, roughly 2 points of the combined ratio improvement. And all this business mix and the evolution that you can hear that we are commenting today are part of this improvement.Is Reinsurance part of core? Yes, it's core. And we have been clear on this. It's not because we want to adjust and if -- our constant efforts in order to improve our profitability mix, that we want to be selective. And that's a reason why with cat we went down, but it's core. I'll remind you as well that one -- the attractiveness of this Reinsurance business is also insurance-linked securities and cat bonds, meaning that when the profitability on the cat side is not sufficient in order to remunerate, I will say, in order to remunerate the volatility, then we can transform parts of this business into a fee business, which is just as the model [indiscernible] to distribute, just like in asset management. So that's the reason why I repeat that for us in this call.And liberalization in China. Johnny, I could say that, for the time being, I repeat what I said before answering previous questions. So we are just in a process of closing our move from 50% to 100% in AXA Tianping [indiscernible] we have 27.5% of the JV with the #1 bank in China. So for the time being, we consider that it's good. And -- however, I could say that we have still to -- we have to improve the profitability of this business, as I explained before. So that's what I can tell you. So -- and we will see in the future, but for the time being, our road map is clear.
Next question comes from Oliver Steel from Deutsche Bank.
Gérald, just one question from me which is looking through the Property & Casualty price increases. Both at XL and in the rest of the group, to what extent are these price increases beating claims inflation?
That -- I could say that, Oliver, if your question is globally -- is your question on the Commercial lines or on the Personal lines?
Well, let's start with XL, first of all...
Okay. As far as XL, it's -- yes. It's I think that's when you have the present price increase and we had -- we were at 3.5% in insurance, so 1.5% in Reinsurance. This clearly -- from this price increase. And this is the price -- this corresponds to the price increase for the first quarter, but the global outlook is very positive. It's positive now, more positive now, which means that, yes -- look at what I said before. This will help increase our profitability. And if -- all of this, I would say, will participate to the improvements in term of combined ratio for XL that I just described before, but as far as the other, the individual lines are concerned, no -- yes, the price increase is -- again, the frequency is still globally improving. We have severity -- frequency and severity -- if I take the price effect globally speaking, say, for Personal matter and for personal non-Motor, the price effect more than offset the combined effects of frequency and severity. The net is positive. It's still true, and it's still true for the first quarter. And I am expecting it still to be true for the whole year. And take in mind the fact that -- keep in mind, sorry, Oliver, that as far as Motor is concerned, we can expect going forward to have a frequency still going down. And the severity is mostly due to [ possibly insurance ] due to the spare parts that -- globally speaking, we can expect to have, some people would say it could be a runoff, but it will be a new, long runoff maybe 20 years or 15 years. But we can expect that it will be positive in term of profitability.
Okay. So sorry, just to sort of summarize all of that: So excluding XL for a second, elsewhere what you're saying is that both across Personal lines and Commercial lines these price increases are -- should lead to an improvement in the attritional loss ratio.
Yes, yes.
Next question comes from Andrew Crean from Autonomous.
Just one question. Can you say anything about a potential loss creep from events in 2018 on XL?
Yes, Andrew. We could say that we -- of course, some of our peers have been reporting on Jebi. And I will say that not just -- you'll remember that, for us, Jebi cost EUR 162 million. It was the impact post of tax and net of reinsurance. Globally speaking, I will say that these typhoon increased for the whole market from 9 billion to 12 billion, so for sure, as a consequence, there will be some impacts for us, but it's too early to share any precise number. But I will say that there will be some other favorable developments. And we can anticipate. My view today is that we can anticipate that other positive developments, favorable developments in other areas could offset these potential impacts from Jebi. That's what I can share with you.
Sir, we haven't any questions.
Okay. Well, thank you very much, everybody.
Thanks to all, and thanks for your time.
Have a great day.
And good day. Have a nice weekend as well. Bye.