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Case Study : Governannce and Control at AXA

Priyanka.Sharma Khushboo.Parikh Foram.Gandhi Ronak

Flow Of Presentation
Introduction

Background Note
Going Global The AXA Boad AXA-Centralizing Business Functions AXA-Efforts to Decentralize The Benefits

Introduction
Henri de Castries is the Chairman, Management

Board and CEO of AXA. AXA is company with insurance and investment products as its core business area. Its strategy was to be a leader in financial protection. Since the mid-1980, AXA had begun spreading out its operations across the world mainly through acquisitions. In 1997, AXA established a dual corporate governance structure with a management board and supervisory board managing its activities.

Background Note
Mutuelle Contre de IAssurance ContrelIncendie

(MCI) was founded in 1816 by Jacques-Theodore le Carpentier and 17 other entrepreneurs as the parent company of AXA. The company was located at Rouen and was established as a fire insurance company. With growing competition from companies like La Providence found in 1838 and La Paternelle found in 1843, MCI decided to diversify and develop its activities. For this purpose, it created two companies-Mutualite Immobiliere and Mutualite Mobiliere, and they started operating in 1847.

In

the 1850s, the companies exanded their activities across France and started covering real estate risks. In 1881, both the companies merged under the name Ancienne Mutuelle (AM). In 1992, AM began offering automobile insurance under the name of AM Accidents. In 1955, AM ventured overseas by starting its operations in Quebec, Canada. In 1958, Claude Bebear Joined the group as a sinior manager.

Going Global
In 1991, AXA formulated a vision of becoming a

global company. The total revenues of AXA were 8.1 billion, with France accounting for a total share of 60%, followed by the rest of Europe with 30.2%, Canada with 0.5%, and revenues from reinsurance at 9.3%

The AXA Board


AXA had achieved much of its growth through various

mergers and acquisitions over a period of two decades. To achieve the objective of becoming a global company, there were several management issues that AXA had to face which include cultural and communication issues, legal compliane, capital allocation, and integrating people and processes. AXA operated in many countries across the workd and had to take into account several kinds of statutory, regulatory and legal, systems and accounting and tax systems as these differed from country to country.

AXA-Centralizing Business Functions


Though AXA aimed at becoming a decentralized organization, it felt it was necessary to centralize some functions in order to achive better synergy and coordination. AXA centralized functions like procurement and technology services.

AXA-Efforts to Decentralize
were made aware of the groups strategy, operational objectives, reporting lines and accountability for organizational objectives. Formal guidelines for business and operations were in place along with a written code of ethics, anti-fraud, and anti-laundering policies. All the subsidiaries of AXA prepared 3 years forcasts. The subsidiaries of AXA presented details of their strategic position, performance review, quantitative targets like revenue, expenses, profitability, etc., about each of their business segments. It also considered sensitivity analysis which includes macro-economic conditions and specific plans for HR, IT and other aspects.
All

Benefits
Balance

between centralization decentralization of its operations. Had control over the important activities.

and