STRATEGIC ALLIANCE

BHARTI AXA GENERAL INSURANCE

GROUP No.7

AMAN SINGH

AVANI ANCHALIA

DEEPANSHU PINCHA

SHAH KANISHA

NIKHIL MAMDAPURE

NUPUR MAHAJAN

ROMIKA SETIA

SUNPREET SINGH
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SESSION 3: ALLIANCE PARTICIPANTS:

● Bharti Enterprises
● AXA insurance

DESCRIPTION (200 words):

Bharti Axa General Insurance Company was a joint venture between Bharti Enterprises and AXA
Insurance with a 51:49 stake division between the two. Bharti and Axa have 2 joint ventures, Bharti Axa
Life which started operations in 2006 and Bharti Axa General Insurance which started operations in
2008. It is an equity alliance. AXA originally had a stake of 26%. However that was increased to 49% in
2015. The company launched its national operations in 2008 and today it has become a national
footprint of distributors trained to provide quality financial advice and insurance solution base to Indian
customers. AXA is an international giant dealing with insurance and asset management, based out of
France and Bharti Enterprises is a conglomerate based out of New Delhi, currently operating in more
than 18 countries across Asia and Africa and has businesses in sectors like telecommunications,
agribusiness, retail, wholesale, financial services and manufacturing. The ideology of the newly formed
venture was based on the synergies brought by one of the largest insurance companies in the world and
Bharti group which brought its local knowledge, infrastructure and vast customer base. The strength of
the parentage and long term commitment of both the participants
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SESSION 6: ALLIANCE MOTIVATION (200 words)

AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically,
and has major operations in Western Europe, North America and the Asia/Pacific area. French insurance
major AXA was looking to tap into the huge Indian market with a population of over a billion people. A
large middle class and increasing income level was expected to drive growth in the insurance sector and
this world leader wanted to capitalize on that growth. Bharti Enterprises, an Indian telecom company
saw this as an opportunity to diversify into the insurance business. Bharti's penetration into the telecom
sector, retail sector and wholesale gave them access to a vast database of potential customers and
distributors that was a major asset for them to take on a lead in expanding into the insurance sector.
Bharti could provide access to customer base of more than 20 million as well as Multi channel execution
capability

The joint venture was formed with the intention of tapping AXA's leading technology and expertise
particularly in the Annual Renewable Term Insurance sector and financial protection as a whole, while
Bharti was expected to bring its strong local market knowledge, reputation and branding and India-wide
deep retail distribution network. With their complementary skills and reciprocal synergies, the
partnership was formed with the objective of penetrating the market to attain significant market share
in the medium term.

At the time when the Life Insurance JV was announced in 2006 and the general Insurance in 2008, the
Indian market was dominated by state owned companies and some other firms were JVs of Lombard,
Germany’s Allianz, Ergo and Italy’s Generali.

In the year 2015, with the increase in the allowable limit of FDI in India, the share of AXA in both the JVs
was increased from 26% to 49%, which speaks for the agility of both the companies and their sheer
commitment of using their respective strengths to their play in increasing penetration in the Indian
Market.
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SESSION 9: ALLIANCE FORMATION (200 words)

Bharti AXA Life was established in 2006 with an aim to offer a number of innovative products and
services that help meet specific insurance needs of customers. The General Insurance JV was
incorporated on 13th July 2017 and started operations in India in August 2008 with its headquarters in
Mumbai.

India was the 58th country of presence for AXA. At formation Bharti had a 74% stake in the joint venture
AXA having 26% stake. This was mainly due to the FDI regulations at that time which have been
subsequently changed. Currently, Bharti has a 51% stake while AXA has a 49% stake in both the joint
ventures.

Bharti AXA has 104 branches around the country and broadly offers insurance solutions for motor and
two wheeler, health and critical illness, property, student and individual & family travel, crop insurance
and commercial lines.

There were three core attitudes that the joint venture adopted at formation: being attentive to
customers with empathy and consideration, being reliable so that there is a trust developed amongst
the customers and being available for the customers at all times.

In July 2019, the Airtel Payments Bank partnered with Bharti AXA General Insurance.

Bharati and AXA both wanted to focus on channel and segment diversification, productivity and prudent
expense management to drive growth in the coming years.

Formational Attributes

1. Meeting of Minds - Both the firms were already in a relationship since 2006 when they launched
74:26 JV in life insurance sector in August 2006. Deepening that relationship, they signed
another MoU for 74:26 JV in general insurance sector whose operations would commence in the
second half of 2007. Their aim was to strengthen their relationship and complement each other
2. Team Composition - Mr Nitin Chopra was appointed as the CEO of Bharti AXA insurance. The
operations were managed in sync by Mr. Mark Pearson, the regional Chief Executive of AXA Asia
Pacific Holdings. The life insurance JV kick started its operations in Hyderabad and launched an
aggressive plan to expand to other cities over the years with General Insurance following the
footsteps
3. Contributions - The new alliance will help the JV tap AXA's leading technology and expertise,
while Bharti will bring its strong local market knowledge, reputation and branding and India-
wide retail distribution network, reported by the companies in their statement
4. Exit Clauses - Much wasn’t specified about the exit clauses of the two firms but with reference
to article cited ‘Bharti exits JV with AXA; RIL enters’, Bharti announced this divestiture due to the
unfit synergies the JV had on the companies business. The acquisition by RIL was based on
purchasing of Bharti’s stake in the JV.
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SWAPNIL: Can we formational attributes here -- How much time for formation, who said what at
formation -- Press releases, Stock market responses on formation?
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SESSION 12: ALLIANCE MANAGEMENT (500 words)

Alliance started with 74% stake of Bharati and 26 % take of AXA. Nitin Chopra was appointed as the
Chief Executive officer of the Alliance. He was not an employee of either Bharti or Axa. He had six years
of experience in Consumer Banking with ABN Amro Bank. CEO was a new recruit basically to maintain
neutrality between the two companies and at the same time interests of both the companies are
represented. Similar was the case with V Srinivasan who was appointed as the Chief Financial Officer of
the Alliance. Bharti Axa started with some number of employees from Bharti and Axa and most of the
other employees were new recruits with most of the employees having experience in Consumer
Banking, Retail Banking and some of them having experience in Insurance. Their main objective was to
achieve position among the top five Private Insurance companies through a Multi Distribution and Multi
Product Platform. Hence it was important for them to recruit people who have experience in retailing as
well as banking so that they can reach as many consumers as it can.

The Governance structure of Bharti Axa when it started its operations, consisted of four parts:

1. Strategic Supervision and Direction :

It consists of the Board of Directors. Company has 11 Directors, Out of whom 3 are Independent
Directors, 4 are Bharti representatives and 3 are AXA representatives and a Chief Executive
Officer and Managing Director. The Board is responsible for overall corporate strategy and
ensures that all rules as laid down by IRDA under the Corporate Governance guidelines are
followed. The CEO and MD oversees implementation of strategy, achievement of the business
plan as well as day-to-day operations. There is an appropriate mix of executive, non-executive
and independent Directors. The Board approves reviews and oversees the actions and results of
the management to ensure that the long-term objective of maximizing profits and enhancing
stakeholders’ value is met with.

2. Control and Implementation:

Control and Implementation objectives are designed by the CEO and MD under the review of
the Board of Directors. Control and implementation team basically consists of team leaders of
the different divisions of the company and they ensure that the divisions under them are
strategically aligned and achieve their daily objectives. THey report to the MD and CEO.

3. Operations Management :

Operations Management generally acts as an integrator between the Mid level Management
and High Level Management. Operations of the company works through many channels such as
Marketing, Human Resources, Finance, Information Technology. For example, Marketing wing is
divided into -

1) DIRECT SALES FORCE – Have two tired salaried adviser force to target the large and diverse
Bharti Airtel customer base.

2) AGENCY- Focus on building a highly productive agency force. This wing needs high quality of
training, and high quality recruitment.

3) BANK ASSURANCE- Plans for developing strategic partnership with quality banks.
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4) CORPORATE AGENCY AND BROKING CHANNEL- Plans for developing strategic partnership.

In this case, head of direct sales force, agency, bank assurance and corporate agency and
broking channel will report to Chief Marketing Officer who oversees their implementation.

4. Risk Management Committee:

Bharti Axa uses Risk Management as a strategic tool to protect itself from various potential and
existing risks pertaining to all the stakeholders in its business operations, while it plans for its
projected growth. It has a Local Risk Management Committee consisting of Chief Risk Officer
(CRO), Chief Innovation and Marketing Officer (CIMO), CEO, CFO, functional heads and
Appointed Actuary (AA). This committee reports to the Board Risk Management Committee
every quarter, where the top risks and controls are reviewed. The company has a dedicated
team to review and monitor different risk such as Strategic Risk, Insurance Risk, Financial Risk,
Operational Risks etc. The Risk Management Team in the Company works in close coordination
with the other functions / business lines. Risks such as financial risk and underwriting risk are
reviewed by the CFO and the Underwriting Team respectively, along with constant supervision
and guidance of the Board.

.
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SESSION 15: ALLIANCE PERFORMANCE (500 words)

Bharti Axa has been successful in exploring the potential of the untapped insurance market. This year
(Financial year 2018-19) Bharti Axa General Insurance has posted its first ever full year profit, recording
a net profit of Rs 3 crore. The growth this year has also been more than the industry average (from 92.6
Cr. loss in the previous year t0 3cr. profit). It took 10 years of operations for Bharti- Axa to reach at this
level of profitability. This has been achieved with constantly expanding the distribution networks ,
relying on a number of strategic partnerships and alliances that focus on distribution and business
expansion with extensive diversification of product lines. The current CEO- Mr. Sanjeev Srinivasan
constantly stresses that the core focus of the company has been and will continue to be on efficient
channel and segment diversification, increase in productivity and focused expense management to drive
market growth and in turn profitability.

Furthermore, in 2012 Reliance Industries Limited expressed interest in buying the Bharti’s stake in the
Joint Ventures with AXA due to growth potentials but later called off in early 2013 due to expensive
valuations and compliance issues despite being cleared by the Competition Commission of India. PNB
was also among potential suitors. This highlights that this was valued as prominent venture to invest in.
In most years, growth in terms of Gross Written Premium is more than that of the industry average.

Bharti-AXA has done really well not just as a business entity but also as an alliance (relationship). In a
statement to Economic Times in 2017 the AXA CEO Thomas Buberl was found saying “Through the
various stages of the partnership, we have remained confident about the Indian market. I don’t think we
have many partnerships that have gone through different phases. It is a very amicable relationship. It is
a good base to make our position in India bigger. We want to become a top 10 player in the next couple
of years. We have done fundamental changes to our business. We have leveraged the presence of Bharti
Airtel more and given them the driver’s seat in the company.” But in the past couple of years there have
been concerns from AXA that Bharti CEO might be too busy focusing on his erstwhile telecom business
and the problems there-in due to changing market conditions for the same, so he might not be as
committed to this business any longer. At the same time AXA CEO Thomas Buberl was also found saying
that if the Government of India allows for it they might also look towards increasing their share to as
high as 74%. Bharti Axa have now also partnered with the Airtel Payments Bank leveraging its vast
network to reach the deep pockets of the rural pockets and the under-insured, thus proving that the
AXA’s dependence on Bharti is reducing. On the other hand, Bharti has been quite silent on the alliance.
So after almost a decade of a great partnership which has yielded great results, financial and otherwise,
tensions are now starting to brew. Now that Bharati no longer has the distribution base advantage that
it had a decade ago, they have lost the notional power in this relationship. On the other hand, AXA has
learned/acquired this particular capability and now is only hindered by the present FDI laws and so they
hold the notional power over Bharti. Hence the alliance has been quite useful for AXA but did Bharti gain
from this alliance what it set out to is still questionable.
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END TERM: LEARNINGS (5)

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REFERENCES

https://economictimes.indiatimes.com/articleshow/59766519.cms?
from=mdr&utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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BACKGROUND NOTES