Annual Report 2001AXA Konzern AG / AXA Biztost Rt.

1REPORT ON THE

2001 BUSINESS YEAR

of

AXA Konzern AG.

2Contents

Members of the Supervisory Board........................................................ 3Members of the Board of Directors ........................................................ 4Status Report......................................................................................... 5The 31st December 2001 balance sheet .............................................. 9The 2001 income statement .................................................................. 11

3Members of theSupervisory Board

MEMBERS OF THESUPERVISORY BOARD

CHAIRMANDr. Claus-Michael DillPresident of Board of Directorsof AXA Konzern Aktien-gesellschaft, Kln(from 15.02.2001)

Dr. Wolfram NolteMember of Board of Directors ofAXA Konzern Aktien-gesellschaft, Kln(until 15.2.2001)

DEPUTY CHAIRMANClaas KleyboldtChairman of Supervisory Boardof AXA Konzern Aktien-gesellschaft, Kln

MEMBERSChristof W. GoeldiDirecteur International AXACentral Europe, AXA GIE(from 16.11.2001)

Nol RichardsonDirector InternationalCentral & Eastern Europe,AXA GIE

Dr. Wolfram NolteMember of Board of Directors ofAXA Konzern Aktiengesellschaft,Kln(from 15.02.2001 to 15.11.2002)

4Members ofBoard of Directors

MEMBERS OF BOARD OFDIRECTORS

CHAIRMANFranz Fuchs(from 15.02.2001)

Dr. Claus-Michael Dill(until 15.02.2001)

MEMBERSDipl.Vw. David Furtwngler

Dr. Ott Csurg(until 31.12.2001)

Othmar Michl(from 15.11.2001)

COMPANY LEADERS HAVING THEPROCURATIONWilhelm BrandstetterMag. Erich EberdorferDr. Lukas HaiderMag. Herbert HblAlfred KarasinskiDr. Peter LoiselDr. Peter LovrekLeopold Raith

5Status Report

ECONOMIC SITUATION

Economic development in 2001 wascharacterized by recurrentrecession warnings related to boththe USA, and Europe and Austria.The events on 11 Septemberreinforced the trend taking shapeearlier and led to a massivedepression. Although, equitymarkets managed to show anupward trend in the followingmonths, development wascharacterized by lateral movements.In the second half of 2001, boomturned to a slight recession inAustria, the GDP grew by 1.2% inrelation to the previous year andlagged behind the 1.7% average ofthe EU15.After 6.7% in 1999 and 5.8% in2000, the unemployment rate wasslightly higher again with 6.1% in2001, nevertheless, it wassignificantly better than the EU15average of 7.6% in 2001. Especiallyin the two last months of 2001 andin January 2002, a definitiveincrease of the unemployment ratecould be observed reaching 8.9% inJanuary 2002, exceeding the usualseasonal fluctuations.The 1.8% inflation represented amedium rate in Europe since theEU15 indicated an average priceincrease of 1.9%. Prosperitymeasured by the gross domesticproduct is expected to grow by1.5% in 2002 in relation to itsgrowth rate in 2001, and will complythrough this through with theaverage GDP growth rate of the 15EU states. A more significantgrowth rate of 2.7% forecast earlier

is now expected in 2003, theearliest.The fast extension of the sluggishgrowth in America last year toEurope made internationaldependence visible and offered theconclusion that the improvingprosperity in America cannot readilybe copied in Europe. After a 4.1%growth rate improvement of theAmerican economy in 2000, thisrate reached only 1.1% in 2001. It isclear that the growth rate of 0.7%expected for 2002 still lags farbehind. An improvement to 3.8%has been forecast for 2003 only,probably exceeding the Europeanaverage.

6THE EXPECTED DEVELOPMENTOF THE COMPANY

Following the balance sheet date,AXA Concern A.G. has developedin compliance with the plan. Nomaterial events, acquisition or saleof stakes have taken place. Weexpect development in line with ourplans and a positive course ofbusiness for the whole year of 2002.

INSURANCE MARKET IN 2001

The unambiguous growth of theAustrian insurance sector can beattributed to life insurance, similarlyto previous years. According to thecalculation of the Austrian insurancecompanies federation, the totalvolume of insurance premiumincreased by 6.6% in 2001 to ATS172 billion (EUR 12.5 billion).

Growth in life insurance slightlyslowed down in relation to 1999 and2000, and reached 8.4% in 2001according to provisional figures.

With its 5.2%, the non-life insurancehas clearly overcome years the ofsluggish growth.

Austria Non-life insurance

The dynamic growth of premiumrevenues in the field of non-lifeinsurance was first of all a result ofthe increase of the motor vehicleliability insurance that hasovercome the long period ofprolonged insurance premiumdecrease. By all means, otherbranches have also shown more

conspicuous increase in revenues.On the other hand, damagesdecreased to 74.2% in 2001, whichis still over the 10-year average of71.2% (1991-2000).

Austria Life insurance

The growth rate of life insurancepremium dropped from 14% to 10%in the first quarter of 2001, to 8.4%in the first six months that becamefinally the annual average rate.

In the last quarter of 2001, due tounforeseen changes of the stockexchange, revenues decreasedparticularly in case of the lump-sumlife insurance bound to investmentfunds, and of the optional pensioninsurance. Revenue from therecurrent premium payments intolife insurance policies bound tofunds, on the other hand, more thanredoubled from a relatively lowlevel.

While the income dynamics relatedto the policies with recurrentpremium payment stagnated at thelevel of the previous year, thegrowth rate of lump-sum policieswent down to about half of the 2000growth rate (22%).

Hungary Property insurance

In the 2001 business year, AXABiztost Rt. was able to continue itsgrowth above the average. Grosspremium revenues from propertyinsurance have increased by 25% -over the market average to EUR64.4 million. The continued increaseof the number of motor vehicles

7sold in Hungary had a positiveimpact on Casco and motor vehicleliability insurances. Besides, thecontinuous expansion of the salesnetwork of the company played animportant role as well. In the field ofproperty insurance, due to majorloss events, insurance technicalproceeds worsened in the past yearin relation to 2000. The annual profitdecreased from EUR 2.7 million(before dividend payment) to EUR1.7 million. Due to the premiumincrease above the average,positive results can be expected forthe 2002 business year as well.

Hungary Life insurance

The premium revenues of AXABiztost Rt. increased by 13% toEUR 20.5 million. This growth rateexceeded the branch averageagain. Unit-linked products hadbeen allocated successfully in thebusiness year. Revenues fromthese products amounted to EUR0.9 million. In the field of lifeinsurance, annual proceedsincreased from EUR 0.6 million inthe previous year to EUR 1.2million.

Hungary Pension fund

AXA Pnztrszolgltat Kft.Budapest functioning as a pensionfund asset manager is owned to98.2% by AXA Konzern AG Austria,Vienna. By intensive sales activity,the membership of AXA PensionFund increased from 138,000 to149,000 as of 31.12.2001. Thepension fund assets managed byAXA Asset Management Ltd.

amounted to EUR 58.5 million in thevoluntary pension fund and to EUR23.5 million in the statutory pensionfund as of 31.12.2001.

The concentration trend in thepension fund market continued in2001. In the statutory range, 85% ofthe whole membership had beenregistered by the 6 largest pensionfunds. In the voluntary range, 75%of the whole membership wasdivided among the 14 largestpension funds. In the next years,the company is going to cooperatein the continuing merger of pensionfunds, and to further increase theassets to be managed (EUR 89.5million) through this. Since itsfoundation in 1998, 2001 was thefirst year when the proceedsachieved by the firm were positive.

Liechtenstein AXAVersicherung AG

The non-life insurance branchtogether accounted a revenuereduction from CHF 6.3 million inthe previous year to CHF 5.1million. In 2001, we suffered majorlosses in the direct business again.The annual after-tax loss was CHF1.6 million in the statement year.With this, the equity capitalamounted to CHF 7.4 million.

Liechtenstein AXALebensversicherung AG

In 2001, the accounted lifeinsurance premium increased by93.4% to CHF 8.2 million.The volume of capital investmentincreased from CHF 21.1 million in

82000 to CHF 27.3 million in the2001 business year. Investmentswere focused on corporate sharesand on fix-rate securities.

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BALANCE SHEET AS OF 31STDECEMBER 2001

Assets

CURRENT CURRENT PRIORYEAR

YEAR TH.ATS YEAR in EUR TH.ATS

A. Intangible assetsI. Intangible assets1.2.

LicensesAdvanced payments on intangible assets

6.622.120,004.101.670,22

481.248,23298.080,00

2.9910

10.723.790,22 779.328,23 2.991II. Tangible assets 9.911.053,58 720.264,35 4.107III. Financial investments1. Investments in related companies 924.857.803,80 67.212.037,80 900.5352. Participations 15.550.377,21 1.130.089,98 8.5503. Securities representing financial investments 188.987.556,59 13.734.261,36 171.434

1.129.395.737,60 82.076.389,14 1.080.5191.150.030.581,40 83.575.981,72 1.087.617

B. Current assetsI. Receivables and other assets

1. Receivables from related parties 7.184.209,91 522.096,90 331.5252. Other receivables and assets 37.644.064,40 2.735.700,85 7.525

44.828.274,31 3.257.797,75 339.050II. Liquid assets / Bank deposits 77.917,74 5.662,50 30.030

44.906.192,05 3.263.460,25 369.080

C. Prepaid expenses and accrued income 472.481,10 34.336,54 2061.195.409.254,55 86.873.778,51 1.456.903

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Liabilities

CURRENT CURRENT PRIORYEAR

YEAR TH.ATS YEAR in EUR TH.ATS

A. EquityI. Share Capital 107.650.000,00 7.823.230,60 107.650II. Capital reserves

Fixed 474.890.843,39 34.511.663,51 474.891III. Profit reserves

Other (free) reserves 602.000.000,00 43.749.046,17 602.000IV. Balance sheet profit/-loss

Profit thereof: retained earning ATS 801.643,07; prioryear TATS 749

(12.667.826,18) (920.606,83) 255.202

1.171.873.017,21 85.163.333,45 1.439.743

B. Reserves non-taxed1. Revaluation reserves based on valuation loss 489.500,00

35.573,35 2.8622. Other non-taxed reserves 444.725,00 32.319,43 445

934.225,00 67.892,78 3.307

C. Reserves1. Reserves for final settlements 343.639,00 24.973,22 1842. Reserves for pensions 11.572.152,00 840.981,08 9.3813. Tax reserves 148.160,00 10.767,21 1004. Other reserves 5.832.094,30 423.834,82 2.610

17.896.045,30 1.300.556,33 12.275

D. Liabilities1. Liabilities to related parties 3.337,20 242,52 1422. Other liabilities

Thereof: tax liabilities: ATS 1.890.856,89; prior yearTATS 0Thereof: Social securityATS 250.519,30; prior year TATS 79 3.990.259,19 289.983,44 1.005

3.993.596,39 290.225,96 1.147

E. Accrued expenses and deferred income 712.370,65 51.769,99 4311.195.409.254,55 86.873.778,51 1.456.903

Wien, 22. February 2002 AXA KonzernAktiengesellschaft

Franz Fuchs e.h. Dipl.-Vw. David Furtwngler e.h.

Othmar Michl e.h.

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INCOME STATEMENT 2001

CURRENT CURRENT PRIORYEAR

YEAR TH.ATS YEAR in EUR TH.ATS

1. Other income 4.489.621,63 326.273,53 3.0832. Payments to personnel -17.360.035,25 -1.261.602,96 -17.1753. Depreciation charge of intangibles and tangibles

-3.902.299,07 -283.591,13 -1.7224. Other expenses -24.529.476,47 -1.782.626,58 -4.4485. Total of lines 1 to 4 -41.302.189,16 -3.001.547,14 -20.2626. Income from investments (thereof: from related companies ATS

15.307.437,33; prior year TATS 268.648) 15.632.437,33 1.136.053,52 268.9087. Income from securities of financial assets 9.242.810,10 671.701,21 5.9088. Interest received and similar income

(thereof: received form related companies ATS 1.255.270,95; prioryear TATS 4.395) 2.548.095,86 185.177,35 4.870

9. Income from sales and other gains on financial assets 4.971.769,40 361.312,57 1.15110. Expenditures of financial assets

(thereof: depreciation ATS 5.347.579,94; prior year TATS 3.248)(thereof: given to related companies ATS 825,20; prior year TATS 0) -5.378.405,21 -390.863,95 -3.247

11. Interest paid and other similar charges(thereof: given to related companies ATS 3.337,20; prior year TATS5)

-3.343,66 -242.99 -5

12. Total of lines 6 to 11 27.013.363,82 1.963.137,71 277.58513. Profit on ordinary business -14.288.825,34 -1.038.409,43 257.32314. Tax -1.553.643,91 -112.907,71 -2.42515. Profit/ loss of the year -15.842.469,25 -1.151.317,14 254.89816. Release of non-taxed reserves 2.373.000,00 172.452,64 017. Addition to non-taxed reserves 0,00 0,00 - 44518. Retained earnings from prior years 801.643,07 58.257,67 74919. Balance sheet profit/-loss -12.667.826,18 -920.606,83 255.202

Wien, 22. Februar 2002 AXA KonzernAktiengesellschaft

Franz Fuchs e.h. Dipl.-Vw. David Furtwngler e.h.Othmar Michl e.h.

Since no complaints had been raised, we provide a non-qualified auditors clause asper paragraph 1 article 274 of the Commercial Law to the annual statements ofAXA Concern AG, Viennaas of 31 December 2001.Pursuant to our statutory audit, the accounting and the annual report comply with the legalrequirements. With due consideration to the principles of proper accounting, the annualstatements shall provide a fair picture on the asset, financial and income relations of thecompany. The status report is in compliance with the annual statements.Vienna, 22 February 2002-05-27

PRICE WATERHOUSE Ltd.Auditors and Consultants

Dkfm. Gogg e.h. ppa. Mag. Hirner e.h.Auditor Auditor

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A REPORT ON THE

2001 BUSINESS YEAR

OF

AXA Biztost Rt.

_13_

Contents

Members of the Supervisory Board........................................................ 14Members of the Board of Directors ........................................................ 15Directorate, Regional and National Directorates .................................... 16Status Report......................................................................................... 18Outlook to the 2002 Business Year........................................................ 23Balance Sheet of 31st December 2001................................................... 25Profit and Loss Statement for the 2001 Business Year .......................... 27

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Members of theSupervisory Board

MEMBERS OF THESUPERVISORY BOARD

CHAIRMAN MEMBERS

Franz Fuchs Othmar MichlChairman of Board of Directors Member of Board of Directorsof AXA Konzern Aktien- of AXA Versicherung AGgesellschaft, Wien(from 15.02.2001) Dipl.Vw. David Furtwngler

Chairman of Board of Directorsof AXA Versicherung AG

Nol RichardsonMember of Board of Directorsof AXA Konzern Aktien-gesellschaft, Kln(from 1.4.2001)

Gerhard UlmerMember of Board of Directorsof AXA Versicherung AG(from 15.11.2001)

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Members ofBoard of Directors

MEMBERS OF BOARD OFDIRECTORS

CHAIRMAN MEMBERS

Mag. Peter Hfinger Sndor Kszegi

Andrs Juhos

Pl Ertl

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Directorate,Regional andNational Directorates

DECENTRALIZEDSALES AREAS

REGIONAL DIRECTORATE

Central region andBudapest

Director: Janos Bords1134 Budapest,Rbert Kroly krt.76-78.Tel.: +36-1-2368-352Fax: +36-1-386-350

Budapest (SC)1134 Budapest, Rbert Kroly krt. 76-78.Pest megye

1134 Budapest, Rbert Kroly krt. 76-78.2600 Vc, Kztrsasg u. 6.2700 Cegld, Kossuth tr 4.

Komrom County2800 Tatabnya, Kos K. t 17/a.

Fejr County8000 Szkesfehrvr, Tvirda u. 2.2400 Dunajvros, Dzsa Gy. t

Ngrd County3060 Pszt, Dek F. t 10.

Western Hungary

Director: Ott Karcsony 9700 Szombathely, Hunyadi u. 10-12.Tel.: +36-94-513-570Fax: +36-94-513-599

Vas County (SC)9700 Szombathely, Hunyadi u. 10-12.

CENTER

1134 Budapest,Rbert Kroly krt.76-78Telefon: +36-1-2386-000Fax: +36-1-2386-060

Zala County8800 Nagykanizsa, Csengery u. 7.8360 Keszthely, Erzsbet kirlyn tja12.8900 Zalaegerszeg, Dek tr 2.

Veszprm County (SC)8200 Veszprm, Kereszt u. 7.

Gyr-Moson-Sopron County (SC)9021 Gyr, rpd u. 21.9400 Sopron, j u. 1.

Northern Hungary

Director: Gyrgy Fldi3525 Miskolc, Szchenyi u. 3-9Tel.:+36-46-500-950Fax:+36-46-500-979

Borsod-Abaj-Zempln County (SC)3525 Miskolc, Szchenyi u. 3-93700 Kazincbarcika, F tr 35.3900 Szerencs, Rkczi u. 102.

Heves County (SC)3300 Eger, Brdy S. u. 4.3200 Gyngys, Haniss tr 1.

Szabolcs-Szatmr-Bereg County (SC)4400 Nyregyhza, Vasvri Pl u. 1.

Hajd-Bihar County (SC)4025 Debrecen, Sumen u. 6.

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Southern Hungary

Director: Zoltn Bihari6000 Kecskemt, Csnyi J. u. 1-3.Tel.:+36-76-500-330Fax:+36-76-600-359

Bcs-Kiskun County (SC)6000 Kecskemt, Csny J. u. 1-3.6500 Baja, Etvs u. 6.

Jsz-Nagykun-Szolnok County (SC)5000 Szolnok, Sznt krt. 16/a.5100 Jszberny, Zirzen Janka u. 8.

Csongrd County (SC)6723 Szeged, Gogol u. 3.

Bks County (SC)5600 Bkscaba, Han Lajos u. 1.

Southern Transdanubia (Pcs)

Director: Dr. Jnos Marenics7621 Pcs, Citrom u. 2.Tel.:+36-72-513-850Fax:+36-72-513-889

Baranya County (SC)7621 Pcs, Citrom u. 2.

Somogy County (SC)7400 Kaposvr, Szchenyi tr 8.

Tolna County (SC)7100 Szekszrd, Rkczi u. 22.

(SC) = Service Center

AXA RC

CENTER

Director: Zoltn Kubovics1025 Budapest, Frankel Le u. 45.Tel.:+36-1-3362-323Fax:+36-1-3362-320

REGIONAL DIRECTORATE

Pest County1025 Budapest, Frankel Le u. 45.2310 Szigetszentmikls, Bajcsy-Zs. u.1.

Gyr-Moson-Sopron County9623 Gyr, Vasvri Pl u. 9.9500 Celldmlk, Grfin tr 2.

Csongrd County6724 Szeged, Dni J. u. 1.

Szabolcs-Szatmr-Bereg County4400 Nyregyhza, Luther tr 1.

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Status Report

ECONOMIC SITUATION

Slower but still dynamic growth,intensively decreasing inflation ratefrom the middle of the year,surprisingly improving economicconditions these were the featureshaving characterized the Hungarianeconomy in 2001. These trends areexpected to prevail on the short run,nevertheless, more difficult conditionswill emerge in the second half of theyear. It is getting more and moreimportant for the very open Hungarianeconomy that the slowing down of thegrowth of the world economy will notturn to recession.

In 2001, similarly to the trend of thelast 5 years, economic growth inHungary was outstanding ininternational terms. According topreliminary estimation, the GDP growthrate was about 4% in Hungary in 2001.This is not a bad result in comparisonto other countries in the region;nevertheless, it is significantly worsethan the 5-5.5% GDP growth rateexpected early this year.

Concerning the objectives of thegovernment, the year 2001 can beconsidered a failure of the struggleagainst inflation since instead of theaverage price dynamics of 7-7.5%,actual price levels increased by 9.2-9.3%. In May, the annual priceincrease was 10.8% representing thehighest rate in many years. In thesecond half of the year processesstarted which could result in fastdecreasing inflation.

The income of the population ofHungary increased to a larger extent in2001 than in the previous years.According to official statistics, real

income increased by about 6.5-7%.The growth of income was typical firstof all in the public sector due to centralwage interventions. The annualaverage of the gross monthly earningswas about EUR 420.

In 2001, the frame conditions of themonetary policy changed significantly.In early May 2001, the National Bankof Hungary expanded the interventionrange of the forint. Due to this, theforint can move in relation to the euroin a range of +/-15%. On 1 October,the crawling peg of the forint had beeneliminated and the middle forint/eurorate has set at 267.1.

The event having the most decisiveimpact on the capital market was theterror attack against the USA on 11September 2001. This unexpectedevent strongly influenced internationalinsurance and reinsurance markets aswell. According to recent statements,insurance companies gave account ona loss of over EUR 19.6 billion.According to the most pessimistic loanassessments, total expenditures mayincrease to EUR 45-57 billion sincefurther losses have been established inthe meantime.

Most of the capital market investors willhave rather unpleasant memories ofthe year 2001 since in most of thestock markets conversion ratesdropped even faster. In the course ofthe year, fears related first of all to theregression of the economic growthprevailed in markets; later, overallrecession became the subject of thisfear. The Budapest Stock Exchangewas mostly touched by decreasingexchange rates, dramatically reducedturnover, buy-out, write-off, andwithdrawal.

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Optimistic and crisis-like periodsalternated in the course of the year inthe domestic market of state securities.From January to May, revenues werecharacterized by a slight increasereflecting the fears of investorsconcerning inflation. The expansion ofthe exchange rate range of forint andthe accompanying reinforcement of theHungarian currency along with thereduction of raw material prices,nevertheless, had unfavourableimpacts on the further course ofinflation. By September 2001, investorscould be reassured again since salesrevenues reached the normal levels,but the terror attack against the USAmade investors uncertain again. InHungary, on the other hand, therewere no serious troubles in thegovernment bond market, a factproved by the evolution of thegovernment bond portfolio owned byinternational investors.

In the first six months of 2002, thetrends of the second half of theprevious year continued along with theregression in the world market and amotivating economic policy in line withexpectations, while the economicprocesses in the second half of 2002will be determined by improvingexternal factors and the restriction ofthe flow out of monetary reserves asusually after elections.

Non-life insurance

In the 2001 business year, AXABiztost Rt. was able to furtherprogress above the average, like in theprevious year.

Evolution of referred insurance premium (1997-2001) million HUF

5 332 6 7859 763

12 99015 494

97 98 99 00 01

Gross premium revenues in the field ofproperty insurance increased by 25%,in contrary to the market trend, to EUR64.4 million. The further increase of thenumber of motor vehicles sold inHungary had a positive impact onCasco and motor vehicle liabilityinsurances. Besides, the continuousexpansion of the sales networks of thecompany played and important role aswell. The insurance technical proceedsworsened most in the area of propertyinsurance. The reason for this was thatmajor losses emerged in the statementyear in relation to 2000.

Loss quota in % (1997-2001)

59,542,8

65,1 61,2

83,4

97 98 99 00 01

The annual profit decreased from EUR2.7 million (before dividends) to EUR1.7 million. Due to the premiumincrease over the average, positiveproceeds can be expected for the 2002business year as well.

Life insurance

The premium revenues of AXABiztost Rt. increased by 13% to EUR20.5 million over the market average.In line with the overall trend, theincrease of new policies stopped;

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follow-up values and the higherpremium amounts of new insurancepolicies played a considerable role inthe premium increase. The companystarted the sale of unit-linked productsin the statement year; the premiumrevenues of these products reachedEUR 0.9 million. Annual proceedsincreased from EUR 0.6 million in theprevious year to EUR 1.2 million.

In line with the practice followed inprevious years, focusing on retailsegments and on large customers,efficient cost savings, and thedevelopment and stabilization of thesales network determined the 2001proceeds of the company.

Evolution of deferred insurance premium (1997-2001) million HUF

1 6522 560

3 4694 468

5 238

97 98 99 00 01

AXA Biztost Rt. has always laid greatemphasis on product innovation.

Motor vehicle insurance continued tobe of major importance for ourcompany. The liberalized new motorvehicle liability insurance system hadbeen introduced on 1 January 2001.Full liberalization did not take place,premium maximization was applied tothe existing policies.A new Casco insurance product wasintroduced in 2001 with extendedscope of services and a so-calledexchange for second-hand vehicles,offering the most favourable servicesthrough selected service stations.

Another innovation product of 2001was a new insurance product forcondominium buildings offering

particularly good policy conditions fornew and relatively young condominiumbuildings.

In 2001, we were able to increase thenumber of our MultiPartner customersto 6000. MultiPartner customersreceived premium refunding from usamounting to EUR 56,000. The systemwill further be developed in 2002.

We managed to further improve the arttreasure insurance branch in 2001,beginning with the involvement of theprivate art collection galleries.

In the framework of life insurances, weappeared in the market not only withthe lump-sum policies bound toinvestment funds (unit-linked) asoriginally planned but we introducedlate in September a version withrecurring premium payment as well.Among the lump-sum versions, there isa policy unique in the Hungarianmarket, bound to the euro, including aprocess service guaranteed by thepolicy issuer. On the other hand, thisshows the success of the introductionof the product with recurring premiumpayment since we could sell this atconsiderable higher price than theformer average premium.

In 2001, we expanded the scope ofservices offered to our customers byestablishing the AXA home credit aid(AXA Lakshitel Asszisztencia) incooperation with an external partner.Through these services, we providehelp in finding and realizing the properloan raising opportunity for those of ourpartners who are holders of ourpolicies to be bound to loans.

2001 is the year of the full unfolding ofthe agency concept. Our partnersaccepted with extreme enthusiasm thatthe agencies had been authorized tomake the most important decisions

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locally and implement through this theoptimum settlement of issues close tothe partner. In order to provide high-standard services to our partners, theagencies are at disposal with office,regular opening time, and a staffhaving experience in both internationaland domestic services. 35 agencieshad been established by the end of2001.

Loss settlement had been transferredto the agencies as well in the case oflosses requiring fast settlement andrepresenting low value, emerging inlarge numbers (minor glass damagesand accidents).

External service staff (1997-2001)

684

9521 168

8701 015

97 98 99 00 01

Through computer-supported salesactivity, the number of policies of ourcompany that had been transferredreached almost 100% in 2001 as well.

Besides sales through our ownchannels, due to our broker relationsgetting closer, more than 50% of ourpremium revenues came through thebroker companies.

In order to maintain the high standardsof services, we performed asatisfaction assessment by phoneagain in 2001, based on which wewere able to respond quickly andaccurately to the expectations of ourpartners in terms of quality.

Our sales staff still comprises 900people. The main task of theconventional (combined) sales networkis the management of various existing

policies and the establishment of newpolicies. On the other hand, RCCcontinues to focus on life and accidentinsurances, and on the acquisition ofnew partners.

Through our products, actions, andstable partner relations, AXA BiztostRt. became even better known in themarket; we managed to implement apremium increase over the marketaverage, as usually in the past years,and to achieve extraordinary successin this year again.

Our company also joined theinternational You&Us AXA offensive in2000, the objective of which was theimprovement of services. In order to beable to offer services of guaranteedquality, as first step, we conducted awide action by phone to assess thesatisfaction and the demands of ourpartners. Based on the evaluation ofthis action, the development ofguaranteed services in compliancewith Hungarian requirements can bestarted in 2002.

Capital investments

The capital investment portfoliorepresented HUF 23,701 million (EUR96.22 million; EUR/HUF 246.33) andexceeded through this that of theprevious year by 28.5%.

Securities represented the bulk ofinvestments (over 96%) where newinvestments were primarily made inbonds of relatively short runningperiods and in international equityshares. By the end of the year, wereached our objectives related to assetallocation. All securities had beenevaluated on the basis of the lowestvalue where treasury bonds had beendevaluated to their face value atmaximum.

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The success of capitalinvestment

The last year was a very complexchallenge for the capital markets. TheHungarian bond market was stronglyinfluenced by the interest ratereductions implemented by theNational Bank, and the decreasinginflation in the fourth quarter. As a rule,the fourth quarter already had apositive impact on the equity marketsof lower earlier performance,particularly in the Hungarian stockmarket.

In this difficult environment, financialrevenues increased from HUF 2,144.8(EUR 8.03 million) to HUF 2,270.6million (EUR 8.5 million). The evolutionof the equity markets in the baddirection led to the steep increase ofvalue corrections concerningsecurities, in the business life, and inbusiness processes.

Capital proceeds NL+L (1997-2001) million HUF

2 0471 716

1 9342 140 2 267

97 98 99 00 01

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OUTLOOK TO THE BUSINESSYEAR 2002

The board determined the mostimportant tasks of the company for2002 in the following:

In the field of life insurance, ourintention is to expand the variety ofpolicies bound to investment funds(unit-linked) in order to cover otherindividual basic customer demands inaddition to general purpose savings.Another important goal is to renew ourlife insurance products by providingloans through banks.

In the field of accident and healthinsurance, our intention is to focus onthe development and sale of insurancepackages for groups.

Long-term market studies show thatproperty insurance in Hungary first ofall Casco will be the guarantee formarket expansion. On the medium run,we reckon with an outstandingefficiency of the whole propertyinsurance branch.

In the field of motor vehicle insurance,the target is for 2002 to sustain theexcellent results of Casco and toincrease the success of motor vehicleLIABILITY insurances, particularly inthe segments, which showed adecreasing trend in recent years.

Our intention is to introduce a packageof services together with our strategicpartner in 2002 to offer further bankand customer service benefits to ourmulti-partners, in addition of the currentpremium benefits.We will expand the Customer CareCenter integrated in the centralcustomer service which will includeloss reports through the green line, the

customer service line, and the flow-through phone operation systemproviding basis for the main functionsof the CC system.

Another objective is for 2002 to expandthe scope of our banking partners inorder to offer our products inconnection with the increasing loandemand of the population, includingthose customers who already holdpolicies bound to loan raising, and tomake the loan raising process easierfor them through AXA LoanAssistance.

In the framework of the up-to-datepublic communication media, wecontinue to develop our Internet pagesand expand the scope of servicesoffered through the Internet.

The success of our activity canprimarily be attributed to the educationstandards of our motivated staff. Herewe rely on our satisfaction assessmentperformed in 2001 to get informationon the satisfaction levels of our staffand to modify the successachievement system of our internalservices staff by developing directrelation between contribution tosuccess and earnings. Our intention is,further more, to expand our trainingsystem where we will offer newopportunities first of all for ourspecialists and managers. Our staffmembers can select in the course ofthe year the training courses mostexpedient to their work from the varietyof training courses supportingmanagement technique and skills.

We would like to thank our customers,sales partners, domestic andinternational staff members on behalfof the board. Their devoted andprofessional activity laid down thefoundations of our success in 2001,

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and also of the fact that as we dohope we will represent the insurance

market as a benchmark corporategroup in 2002 as well.

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AXA BIZTOST RT.BALANCE SHEET ASOF 31.12.2001

Assets in thousand HUFDescription 31.12.2000 31.12.2001 Life Non-Life Nonseparable

A. Intangible assets 130.946 295.676 0 0 295.676B. Investments 18.225.277 23.342.830 13.529.894 9.688.548 124.388I. Real estate 125.892 124.388 0 0 124.388

II. Investments in affiliated companies 20.390 20.390 0 20.390 0III. Other investments 18.078.995 23.198.052 13.529.894 9.668.158 0IV. Deposit receivables from reinsurers on inward reinsurance 0 0 0 0 0V. Revaluation of investments 0 0 0 0 0C. Investments made on policyholders own risk (life) 0 188.645 188.645 0 0D. Receivables 2.576.492 2.425.419 433.673 1.795.848 195.898I. Insurance receivables 1.883.126 1.855.617 431.669 1.423.948 0

II. Reinsurance receivables 423.325 326.215 2.004 324.211 0III. Receivables from reinsurers on insurance technical reserves 0 0 0 0 0IV. Other receivables 270.041 243.587 0 47.689 195.898E. Other assets 590.554 882.064 85.712 396.818 399.534

1. Fixed assets (without real estates) and inventories 224.849 399.534 0 0 399.5342. Cash and bank 365.705 482.530 85.712 396.818 03. Treasury stock 0 0 0 0 04. Other 0 0 0 0 0

F. Prepaid expenses and accrued income 1.552.675 1.802.580 909.501 878.090 14.989TOTAL ASSETS 23.075.944 28.937.214 15.147.425 12.759.304 1.030.485

Liabilities in thousand HUFDescription 31.12.2000 31.12.2001 Life Non-Life Nonseparable

A. Equity 2.737.390 3.476.876 782.026 2.694.850 0I. Share capital 1.173.000 1.173.000 187.680 985.320 0

II. Subscribed capital unpaid (-) 0 0 0 0 0III. Capital reserves 2.213.433 2.213.433 354.149 1.859.284 0IV. Profit reserves () -1.303.320 -649.043 -52.317 -596.726 0V. Non-distributable reserves 0 0 0 0 0

VI. Revaluation reserves 0 0 0 0 0VII. Balance sheet profit () 654.277 739.486 292.514 446.972 0

B. Subordinated loans 0 0 0 0 0C. Insurance technical reserves 16.351.209 21.839.746 12.676.773 9.162.973 0

1. Reserves for unearned premiums 1.244.554 2.028.049 737.188 1.290.861 02. Mathematical reserves 8.412.986 11.353.396 11.103.397 249.999 03. Reserves for outstanding claims 4.942.792 6.842.387 51.468 6.790.919 04. Reserves for profit dependent and non-profit dependent

premium refunds841.094 816.695 743.477 73.218 0

5. Claims equalization reserves 181.217 181.217 0 181.217 06. Other insurance technical reserves 728.566 618.002 41.243 576.759 0

D. Insurance technical reserves for financial assets of the ULlife assurance (1+2)

0 188.645 188.645 0 0

E. Provisions 0 0 0 0 0F. Deposits from reinsurers 0 3.801 0 3.801 0G. Payables 3.238.393 2.511.329 282.021 1.978.265 251.043I. Payables from direct insurance activities 1.140.779 1.587.608 282.021 1.305.587 0

II. Reinsurance payables 1.615.330 668.084 0 668.084 0III. Bonds payable 0 0 0 0 0IV. Loans payable 0 0 0 0 0V. Other payables 482.284 255.637 0 4.594 251.043H. Accrued expenses and deferred income 748.952 916.817 17.479 38.330 861.008

TOTAL LIABILITIES 23.075.944 28.937.214 13.946.944 13.878.219 1.112.051

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AXA BIZTOST RT.INCOME STATEMENT AS OF 31.12.2001

in thousand HUF

Description 31.12.2000 31.12.2001 LIfe Non-LifeA) Non-Life01. Earned premiums, net earned premiums 11.331.573 13.746.569 0 13.746.569

a) Gross premium income 13.084.644 16.364.596 0 16.364.596b) Premium ceded (-) -1.631.231 -1.848.912 0 -1.848.912c) Change in reserves for unearned premiums () -95.182 -870.416 0 -870.416d) Change in reserves for unearned premiums ceded () -26.658 101.301 0 101.301

02. Investment income refundable to policyholders (according to line C/06.) 0 0 0 003. Other insurance income 25.729 55.265 0 55.26504. Claim expenditures 7.694.410 10.472.653 0 10.472.653

a) Claim expenditures and claim settlement expense 7.253.761 8.585.145 0 8.585.145b) Change in reserves for outstanding claims () (Outstanding claims, IBNR) 440.649 1.887.508 0 1.887.508

05. Change in mathematical reserves () 41.854 20.367 0 20.36706. Change in reserves for profit and non-profit dependent premium refunds () -44.819 29.584 0 29.58407. Change in claims equalization reserves () 0 0 0 008. Change in other insurance technical reserves () -157.824 -151.808 0 -151.80809. Net operating expenses 3.684.131 3.755.916 0 3.755.916

a) Acquisition costs incurred during the year 1.705.382 2.187.666 0 2.187.666b) Change in deferred acquisition costs () 0 -531.369 0 -531.369c) Operating expenses 2.092.122 2.256.506 0 2.256.506d) Commissions ceded and reinsurance profit sharing (-) -113.373 -156.887 0 -156.887

10. Other insurance technical expenses 160.724 148.715 0 148.715A) INSURANCE TECHNICAL PROFIT/(LOSS)

(01+02+03-04050607+08-09-10)-21.174 -473.593 0 -473.593

B) Life01. Earned premiums 4.359.369 5.192.832 5.192.832 0

a) Gross premium income 4.652.842 5.252.812 5.252.812 0b) Premium ceded (-) -108.418 -45.601 -45.601 0c) Change in reserves for unearned premiums () -185.064 -14.450 -14.450 0d) Change in reserves for unearned premiums ceded () 9 71 71 0

02. Insurance income from investments 1.089.774 1.332.569 1.332.569 0a) Dividends received and investments 3.011 3.506 3.506 0b) Other investment income 1.124.688 1.288.143 1.288.143 0c) Gain on sale of investments, other income from investments 78.180 133.664 133.664 0d) Allocated investment income on life assurance (according to line C/05. )(-)

-116.105 -92.744 -92.744 0

03. Non-realized income from investments 0 1.058 1.058 004. Other insurance income 1.149 2.664 2.664 005. Claim expenditures 409.135 727.017 727.017 0

a) Claim expenses and claim settlements expense 393.396 714.930 714.930 0b) Change in reserves for outstanding claims () (Outstanding claims, IBNR) 15.739 12.087 12.087 0

06. Change in mathematical reserves () 2.524.046 2.920.044 2.920.044 007. Change in reserves for profit and non-profit dependent premium refunds () 56.415 -53.982 -53.982 008. Change in claims equalization reserves () 0 0 0 009. Change in other insurance technical reserves () 0 229.888 229.888 010. Net operating expenses 2.117.647 2.187.716 2.187.716 0

a) Acquisition costs incurred during the year 1.125.653 882.744 882.744 0b) Change in deferred acquisition costs () 19.799 141.614 141.614 0c) Operating expenses 972.229 1.163.397 1.163.397 0d) Commissions ceded and reinsurance profit sharing (-) -34 -39 -39 0

11. Insurance technical expenses of investments 36.233 130.159 130.159 0a) Investment expenses incl. interest paid and similar expenses 3.496 36.114 36.114 0b) Impairment loss of investments and reversal of impairment () 28.553 80.204 80.204 0c) Loss on sale of investments, other expenses of investments 4.184 13.841 13.841 0

12. Non-realized loss of investments 0 8.711 8.711 013. Other insurance technical expenses 400 1.235 1.235 0B) INSURANCE TECHNICAL PROFIT/(LOSS)

(01+02+03+04-0506070809-1011-12-13)306.416 378.335 378.335 0

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Description 31.12.2000 31.12.2001 LIfe Non-LifeC) NON-INSURANCE TECHNICAL RESULT

01. Dividends received and gain on financial investments 2.461 2.454 0 2.45402. Interest received and other similar income 897.111 924.233 0 924.23303. Income from tangible fixed assets of the insurance technical investments 739 0 0 004. Gain on sale of investments, other income from investments 93.686 114.651 0 114.65105. Allocated investment income on life assurance (according to line B/02.d) 116.105 92.744 0 92.74406. Investment income refundable to policyholders (-) (according to line A/02.) 0 0 0 007. Investment expenses incl. interest paid and similar expenses 5.997 3.123 0 3.12308. Impairment loss of investments and reversal of impairment () 14.204 48.118 0 48.11809. Loss on sale of investments, other expenses of investments 14.394 14.679 2.963 11.71610. Other revenues 44.857 269.465 83.418 186.04711. Other expenditures 318.310 319.723 93.801 225.922D) PROFIT/(LOSS) ON ORDINARY ACTIVITIES

(AB+01+02+03+04+05-06-07-08-09+10-11)1.087.296 922.646 364.989 557.657

12. Extraordinary revenues 5.035 481 167 31413. Extraordinary expenditures 24.696 0 0 014. Extraordinary PROFIT/(LOSS) (12-13) -19.661 481 167 314E) PROFIT BEFORE TAX (D14) 1.067.635 923.127 365.156 557.971

15. Corporate tax 213.358 183.641 72.642 110.999F) PROFIT AFTER TAX (E-15) 854.277 739.486 292.514 446.972

16. Use of retained earnings for dividend, participation 0 0 0 017. Dividend paid (payable) 200.000 0 0 0G) BALANCE SHEET PROFIT/(LOSS) ( F+16-17) 654.277 739.486 292.514 446.972

AXA Biztost Rt. 1134 Budapest, Rbert Kroly krt. 76-78.Tel.: (01) 238 - 6000 Fax: (01) 238 - 6060 Internet: www.axa.hu E-mail: info@axa.hu