Organizational Restructuring at AXA: Adopting (and Dropping) a New Business Model

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Background Note

The Axa group originated in Paris (France) in 1817, under the name of Ancienne Mutuelle. Over the next century, the company established itself firmly in the business and became one of the biggest insurance companies in the region. In 1955, Ancienne Mutuelle started offering its services in Canada too. The company's name was changed to Les Mutuelles Unies in 1978.

In the early-1980s, the company decided to increase its thrust on building a wider and stronger presence in the insurance business. In line with this decision, it entered into a series of strategic alliances with various regional insurance companies. In 1982, it acquired Groupe Drouot, which itself was a conglomeration of various insurance companies. Groupe Drouot specialized in the property-casualty insurance business and, hence, was a good strategic fit for the life insurance specialist, Les Mutuelles Unies. During 1984-85, the company felt the need for a contemporary name that could be pronounced easily across the world. Les Mutuelles Unies decided to have a short name starting with the alphabet 'A,' apparently to appear in the beginning of directories/other listings.

They finally zeroed in on Axa. In 1986, the company took control of Groupe Présence, a French stock insurance company. In 1988, Axa acquired a substantial equity stake in a subsidiary of Assurances du Groupe De Paris, la Compagnie du Midi.

This merger extended Axa's reach to Germany, the United Kingdom (UK) and the Netherlands. The insurance business was now being run under the name Compagnie du Midi and it began to be traded on the Paris Stock Exchange.

In 1990, Compagnie du Midi was renamed Axa. During 1990-91, Axa restructured its insurance operations in France and established Mutuelles Axa as the outfit controlling various insurance companies in the group.

Between 1991 and 1996, the company made a series of acquisitions in the North American, Asia/Pacific and Western Europe regions (Refer Table I for some of the deals). At the same time, Axa sold all those businesses that did not fit in with its strategic plans. The year 1992 marked the beginning of the group's international expansion phase as it started making investments and acquisitions across the world.

In this year, the company got a majority stake in the US-based Equitable Companies, when its subsidiary, The Equitable Life Assurance Society of the United States, was demutualized. As a result of the demutualization, Axa now had in its fold other Equitable Companies units [Alliance Capital Management (into asset management) and Donaldson, Lufkin & Jenrette (into investment banking)] as well...

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