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18 August 2000 Substantial movement in AXA share price on 17 August. AXA Asia Pacific have today provided this information to the ASX in response to yesterday's significant share market activity. 1. BACKGROUND AXA Asia Pacific Holdings (AAPH) is issuing this information in response to share market activity yesterday based on market speculation regarding resignations of agents from AXA China Region. This suggested that AXA China Region (ACR) had suffered a substantial loss of agents to one competing company. AAPH has been aware of and has publicly discussed over recent months the very aggressive agent poaching campaign by certain participants in the Hong Kong market which has affected a number of companies over the last two years. 2. AGENCY RESIGNATIONS ACR has been pursuing a policy of actively reviewing the performance of it’s agency force to improve both quality and productivity and, as a result of this policy has terminated the engagement of a number of agents and managers. In April one of our least productive agency leaders resigned and we understand he signed a contract to join Pacific Century International (PCI) in July. The Hong Kong market has been experiencing extremely aggressive poaching tactics in recent months with, for example, sign-on offers to agents of up to 1 years commission . ACR does not believe that this activity is commercially sustainable or in the best long-term interest of either policy holders or shareholders. The Hong Kong Insurance Commissioner has publicly denounced that “agent poaching” is almost always against consumer interests. We are using this message extensively in communications to our customers. As at 17 August the IARB register shows that 69 of our former agents have registered with Pacific Century International. We do expect that this number will increase as a result of the action we will continue to take to improve the performance of our sales force. A small number of our former agents have already returned to AXA expressing dissatisfaction with PCI and it is possible that more will do so. Agent numbers at the and of March were 2,950. As at today there are 2,467 agents working for the company. We ascribe this to the actions we have taken to improve the performance of our sales force (in which 298 agents have had their contract terminated at the company’s inception) as well as normal agent resignations and retirements. Additionally the new government imposed agent examination has seen an overall 11% decline in the number of commissioned agents in the Hong Kong market since February. Undoubtedly aggressive agent poaching has had an effect on agency turnover but we do not believe it to be the major factor. At the same time AXA China Region is actively recruiting agents and we have signed 232 over the same period. We will be increasing our recruiting efforts over coming months. We do not expect that the impact of these resignations will have any material effect on the progress or value of the business. A number of management initiatives have been and continue to be taken to retain and build our successful and highly productive agency sales force. These include performance-related bonuses, incentives for recruiting new agents and servicing orphan clients, and boosting short term performance contest rewards. 3. SUCCESS OF AXA CHINA REGION AXA China Region has been extremely successful. The company has recently been named as “Best Insurance Company in Hong Kong” by Capital Magazine, a prestigious award which has generated very favourable publicity. This dominant position has been achieved partly on the strength of the company’s values. Aggressive bidding for agents or in fact counter-bidding is not in accordance with these values and AXA China Region will recruit as agents only those who subscribe to our values and put the interests of customers and shareholders before their own. This, we believe, is consistent with growing shareholder value. The morale of the company is strong and has been boosted by this award, an accolade which would not have been possible without a strong performance culture and the excellent work of the great majority of our people. ACR is implementing some exciting distribution and product initiatives to increase sales volumes. These include salaried advisers and a range of investment linked products. Strategies are a place to retain customers, including the establishment of a specialist policy conservation team, free advice on policy comparison and incentives to agents to take on serving orphan clients. AXA China Region has a strong performance culture and believes that shareholders' interests are best served by having senior agency managers, leaders and agents who justify their position by continuing high performance. We believe that our agency leaders are excellent examples of best practice agency management who are certainly among the best in Hong Kong. LES OWEN GROUP CHIEF EXECUTIVE Contact Details: Robin Burns, General Manager, Corporate Affairs Ph (03) 9616 3631 Liz Palma, Media Relations Manager Ph (03) 9618 4944 AXA Asia Pacific Holdings Limited ACN 069 123 011 |