Governance and Control at AXA

Case Code: BSTR224 Case Length: 18 Pages Period: 1991-2006 Pub Date: 2006 Teaching Note: Not Available

Price: Rs.400 Organization: AXA Industry: Banking and Financial Services Countries: India, Japan Themes: Corporate Governance, Control

Abstract Case Intro 1 Case Intro 2 Excerpts

Background Note

The parent company of AXA, Mutuelle Contre de l'Assurance Contre l'Incendie (MCI) was founded in 1816 by Jacques-Théodore le Carpentier and 17 other entrepreneurs. The company was located at Rouen and was established as a fire insurance company. For a period of five years, every shareholder in the company was both insurer and the insured party. This was the beginning of a mutual company, where the insured parties owned the company. With growing competition from companies like La Providence (founded in 1838) and La Paternelle (founded in 1843), MCI decided to diversify and develop its activities. For this purpose, it created two companies - Mutualité Immobiliére and Mutualité Mobiliére, and they started operating in 1847. In the 1850s, the companies expanded their activities across France and started covering real estate risks. In 1881, both the companies merged under the name Ancienne Mutuelle (AM).

In 1922, AM began offering automobile insurance under the name of AM Accidents. In 1944, during the Second World War, US forces bombed the company's offices. Though the accident and life insurance divisions were not severely damaged in the bombing , tighter controls became necessary. This led to the constitution of Groupe AM in 1946 under the leadership of André Sahut d'Izarn. The company's first merger, the one with AM du Calvados, took place in 1946. The other acquisitions made during the next decade were Mutuelle d'Orléans, Mutualité Gérale life insurance company and La Participation. In 1955, AM ventured overseas by starting its operations in Quebec, Canada. In 1958, Claude Bébéar (Bébéar) joined the group as a senior manager. Bébéar was sent to Canada on an assignment and he developed the Canadian subsidiary of AM named Provinces Unies. The early 1970s were turbulent for AM after the death of André Sahut d'Izarn in 1972. To make matters worse, activities at AM were paralyzed for over two months in 1974 owing to a strike in the company. The strike ended with the appointment of Bébéar as Chairman. Bébéar brought in several changes beginning with the change in the company's name. AM was renamed Mutuelles Unies (MU) in 1978. In the same year, MU acquired a company, Compagnie Parisienne de Garantie, located in France....

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