Incorporated: 1817 as Compagnie d’assurances Mutuelles contre l’incendie dans les départements de la Seine Inférieure et de l’Eure
Assets: FFr4.014 billion (US$695 million)
AXA, an insurance group with mutual companies at the head of its financial structure, is the second-largest insurance group in France and the 30th largest in the world. Although it has only been operating under its present name since 1984 and is located in Paris, AXA’s roots are in 19th-century Normandy. After a rather uneventful history before the 1950s, it recently experienced spectacular growth as well as extensive internationalization. Under the influence of one man, Claude Bébéar, AXA successively bought and absorbed several companies, some of which were twice its size. In 1990 AXA once again faced a phase of restructuring and merging.
The first company in the history of AXA was created in 1817. This company was responsible for the two main characteristics of the group before the 1970s: its location in Normandy and its legal status as a mutual company. Jacques-Theodore le Carpentier, with 17 other property owners, established the Compagnie d’assurances Mutuelles contre l’incendie dans les départements de la Seine et de l’Eure, a fire insurance company situated at Rouen. In the company’s legal documents it was stated that every shareholder was to be both insurer and insured party for five years, this being the basic principle of mutuality, where the insured parties own the company. On the properties insured was a plaque bearing the letters P.A.C.L. (propriété assurée contre l’incendie), indicating that they were insured against fire loss. The first damage for which the company had to pay occurred in 1819, amounting to FFr7.5. Realizing the impossibility of sharing this cost among 1,264 shareholders, the company invented the reserve fund. Soon afterwards in 1822, the famous fire of Rouen Cathedral required shareholders to pay for a more important claim, an event not easily forgotten.
Great changes following the industrial revolution, as well as increasing competition from companies such as La Providence or La Paternelle, created in 1838 and 1843, respectively, required the company to expand and diversify its activities. Adolphe Lanne, manager since 1832, decided to create two companies. The first one, Mutualité mobilière, replaced the original company; the second, Mutualité Immobilière, was to insure movables risks. The people of Rouen called the former Ancienne Mutuelle to distinguish it from the latter, which went into business in 1847. In 1852 a major quarrel occurred between insurance companies and the French government. Concerned about the dangers associated with the recent invention of the match, insurers tried for more than 20 years to have its production restricted or even forbidden. The government held on, and eventually established a state monopoly for the making and selling of matches. In the meantime the board made two decisions. They would extend activities to cover the whole of France, and the Mutualité Mobilière would now also cover real estate risks. In 1881, Mutualité Immobilière and Mutualité Mobilière merged under the name of Ancienne Mutuelle, which it retained until 1977. At this time the new chairman, M. Masselin, decided to offer life insurance. In this way Mutuelle Vie life insurance company was born.
The beginning of the 20th century and World War I did not bring any great change for Ancienne Mutuelle (AM). After moving offices in Rouen in 1902, the first important step was undertaken just after the war when in 1922 Anciennes Mutuelles Accidents, an automobile insurance branch was established. It developed quickly and was to make a major contribution to the company’s profits.
In World War II, the company did not escape so lightly. In April 1944 its new offices were bombed by U.S. forces; this loss was followed by the death of Gaston de Payenneville, chairman since 1913. AM emerged from the war in poor shape generally, although the accident and life divisions were less severely afflicted. Soon the necessity of a tighter group structure became apparent. This change was accomplished in 1946 with the constitution of the Groupe Ancienne Mutuelle under the leadership of André Sahut d’Izarn. In 1948 the Groupe was thriving once more, proving the validity of its motto: “E cinere suo re divide” — “rising again from its ashes.” From the mid-1940s until the 1970s the Groupe experienced steady though unspectacular growth achieved by a succession of mergers with other insurance mutual companies. The first, in 1946, was with the Ancienne Mutuelle du Calvados, created in 1819 and a long time collaborator of AM. Then in 1950 the Mutuelle d’Orléans asked to join the Groupe, via the Mutuelle Vie, since it was a life insurance company. Next came the Mutualité Générale life insurance company, also known for insuring the French communes —cities, or parts of cities, with individual legal status. Finally in 1954 La Participation, created in 1899 as a non-life insurance company, entered the AM.
In 1955, before the Groupe began to expand abroad, André Sahut d’Izarn could count within his company eight mutuals and further nonmutual companies which were 100% subsidiaries. Among the latter was the Ancienne Mutuelle Transport de Bétail, created in 1939 in order to insure rail transport of livestock. It soon became a public company, after which it was acquired by AM. In 1977 it became the AMRE, the reinsurance company of AM.
In 1955, AM went into business in Canada, focusing particularly on Quebec. This step, together with the arrival at AM of a young graduate, Claude Bébéar, the son of a schoolteacher, marked the beginning of a great phase of expansion at AM. In the midst of the political events of May 1968 in Paris, André Sahut d’Izarn celebrated in fitting style the 150th anniversary of the Groupe. The party in Belbeuf, Normandy, is said to have been particularly lavish and welcomed a very special guest: a computer, recently acquired.
After this phase of development, AM experienced a crisis. The death of chairman André Sahut d’Izarn in June 1972 may have been a contributing factor. In April 1974, the longest strike known in insurance history began. It lasted for more than two months and totally paralyzed the AM Groupe. Eventually it ended in June with the nomination of Claude Bébéar as chairman and the establishment of an innovative social policy.
From this point, the history of AXA, at that stage Groupe Ancienne Mutuelle, cannot be separated from the story of Claude Bébéar’s ambition and rise to power. In the French insurance world, Bébéar was known as the cowboy of insurance, also described by le Nouvel Economiste, October 21, 1988, as the “avant-garde insurer” and elected by his peers in 1988 as Manager of the Year. He started by changing the name of the group, with its old-fashioned connotations, replacing the adjective ancienne with unies, or “united.” By 1978, Mutuelles Unies had already taken control of the Compagnie Parisienne de Garantie and the Mutuelle de l’Quest, specializing in legal protection, also joined the group. Two years later, Mutuelles Unies and its subsidiaries achieved a total turnover of FFr2.4 million with 2,300 employees around the world and more than 700 sole agents working for the group.
The first major opportunity for Bébéar to expand through acquisition occurred in 1982 with the spectacular purchase of the Drouot Group. Established in 1948 as a public company quoted on the Paris stock exchange, the Drouot Group only began operating under this name from 1977, although its history went back to the 19th century. At the time of its purchase, the results of its automobile insurance division were poor and its financial policy was not very sound. Nevertheless the takeover battle turned out to be fierce and highly publicized; Bébéar was trying to absorb a company at least as big as his own. This takeover bid is also said to have been quite traumatic for the Drouot employees. According to the Expansion, May 31, 1990, other companies began to fear what they called “other drouotisations.” Trying to justify himself, Bébéar explained in the same paper: “We may be upsetting people but we are also cutting out the dead wood.” Not only did he achieve the latter, but he soon took further significant steps, transforming Mutuelles Unies into AXA in 1984. He chose this name because it had no meaning whatsoever, was internationally pronounceable, and was an easily-remembered palindrome.
The next stage occurred in 1986, with Drouot as the vehicle. Drouot made a takeover bid for La Providence, an old company owned by an ancient line of the French aristocracy. At this very moment La Providence was merging with Le Secours, another insurance company established in 1880. When AXA—via Drouot—took control of La Providence at the end of a long takeover battle, Bébéar killed two birds with one stone and acquired both La Providence and Le Secours, merged under the name of Présence. These were important life and non-life insurance companies with a large network of domestic and international branches, especially in Europe. They had also had, until the 1960s, considerable presence in the French colonies, La Providence in Algeria and Le Secours in Indochina.
Although the purchases of Drouot and Presence were crucial points in AXA’s development, AXA’s last coup remained its most famous. It began in 1988 when Bernard Pagezy, chairman of the holding company la Compagnie du Midi, including the AGP (Assurances du Groupe de Paris), came to see Claude Bébéar. Threatened with absorption by the Italian insurers Generali, Pagezy asked AXA for protection. He proposed to give Bébéar Midi’s insurance interests in exchange for participation and protection. This happy marriage did not last very long, and the collaboration soon turned into a fight as AXA began to think seriously about buying le Midi. It was through the proceedings of February 1989’s general meeting that Bébéar, assisted by Generali, the very same company that Midi feared, eventually managed to take 100% control of la Compagnie du Midi. After a short period as AXA-Midi, the company’s name reverted to AXA.
By acquiring Midi, not only had AXA taken over a major holding company but now as a result controlled Midi’s enormous international network. The Compagnie du Midi had had a significant presence abroad, especially in the United Kingdom. In 1982 it had taken possession of London & Hull, an airline, marine, and industrial insurance company. Five years later, it bought life insurers Equity & Law. Its U.K. interests alone achieved a turnover in 1988 of FFr5.5 million.
In February 1989 AXA could boast 42 companies around the world, 4,000 general agents, 16,000 employees, and a turnover of FFr45 million. Only nine years earlier, Mutuelles Unies had had 2,300 employees, 700 agents, and a turnover of FFr2.4 million. Claude Bébéar had definitely proved his business acumen. The structure of AXA, with mutual companies heading the group, protects the company—according to French legislation—from any kind of takeover bid.
The most recent challenge undertaken by AXA was a total restructuring of the group, which is still in progress and the outcome of which is still uncertain. The restructuring began in 1986 when Bébéar, for the first time in French insurance history, began the complete transformation of AXA’s distribution network. Instead of a traditional system, whereby each company had its own general agents, insurance brokers, and other sales organizations, Bébéar chose to reorganize horizontally. He merged all group companies into three main units, each of them corresponding to a single channel of distribution. As a result, AXA consists of three entities, each specializing in one channel of distribution. Axa Assurances includes the company’s general agents, Uni Europe the insurance brokers, and Franklin Assurances deals with the remaining sales organizations. This structure is only valid for France; foreign distribution has not been affected. Bébéar is convinced of his system’s efficiency and of its relevance to the market. Whether he is right or not remains to be seen.
AXA Belgium; AXA Canada; Equity & Law (U.K.); London & Hull (U.K.).
Gallix, Lucien, Il était une fois... l’ assurance, Paris, l’Argus, 1985; L’Argus se souvient 1877-1987, Paris, la Sécuritas Editeur, 1987; Antoni, Marie Louise, “Claude Bébéar, un assureur d’avant-garde,” Le Nouvel Economiste, November 21, 1988; Alexandre, Roger, “Tu fusionneras dans la douleur,” L’Expansion, May 31, 1990; Allard, Laurence, and Georges Quioc, “Axa-Midi: Bilan d’une Stratégie de Mouvement,” Le Figaro, June 5, 1990.