Porter’s Five Forces Analysis of AXA GROUP
Key Facts
| Name | AXA Insurance Company |
| Industry | Insurance |
| Founded | 1816 |
| Headquarters | Paris, France |
| CEOs | Thomas Buberl |
| Revenues | €99.93billion (2021) |
| Loss | €7.51billion ( 2021) |
| Competitors | Allianz, American International Group (AIG),
Berkshire Hathaway |
Company Overview
AXA Group operates as a holding company, which engages in the provision of insurance and asset management services. It operates through the following segments: France, Europe, Asia, AXA XL, the United States, International and Transversal & Central Holdings.. The company was founded in 1985 and is headquartered in Paris, France. Currently it operates in 50 countries and have around 95 million clients.It is ranked at 48 by Fortune 500.
Porter’s Five Forces Analysis
Analyzing competition is an important part of strategic position analysis. It is also important to assess the strength of competition in a market, and try to understand what makes the competition weak or strong. Porter’s Five Forces Analysis is a popular framework for examining business strategies in light of the industry in order to lessen rivalry and increase profits. It was developed in 1979 at Harvard Business School by Professor Michael E. Porter.
AXA Rivalry among Existing Competitor
AXA Group: The AXA Group was founded in France and is currently among the biggest insurance providers on the planet. The company’s business lines include asset management, protection, health, life, and savings insurance as well as property and casualty insurance. AXA currently has over 100 million clients and operates in 54 different countries throughout the world. With €32.4 billion, Europe contributed the most gross written premiums to the group in 2021.
The segment that generated the most revenue for the company in 2021 was property and casualty. Despite a 20% decline in total assets between 2018 and 2019, AXA nonetheless placed second in the ranking behind Allianz SE, which has its headquarters in Germany.
Return on assets (ROA) is a crucial indicator of a company’s profitability since it examines how well a company’s management is generating earnings from its assets. The return on assets, expressed as a percentage, is derived by dividing net income by total assets. In contrast to insurers like Zurich Insurance Group AG Ltd. and Swiss Chubb Limited, AXA had a ROA ratio of 0.26% in 2018.
Allianz: It offers advice services regarding investments and insurance. Property-Casualty, Life/Health, Asset Management, and Corporate and Other are the segments through which it operates. The business was established on February 5, 1890, by Wilhelm Finck and Carl Thieme, and it has its headquarters in Munich, Germany.
It revenue has grown from €100.97 billion in 2005 to €148.51billion in 2021, almost €50 billion increase. Its revenue grows at compound annual growth rate of 2.30%.
As of February 2022, Allianz ranked as the fifth-largest insurance provider globally by market value. Despite minor fluctuations, the operating profit of the Allianz Group increased overall between 2005 and 2021. The Group’s operational profit in 2021 exceeded €13 billion, the largest amount recorded during the period under observation and an increase of almost €2.65 billion over the previous year.
American International Group (AIG): Offering a variety of property and liability insurance, life insurance, retirement plans, and other financial services to business and individual clients is the business of American International Group, Inc. General Insurance, Life and Retirement, Other Operations, and Legacy Portfolio are the segments through which it conducts business. The business is located in New York and was established in 1919 by Cornelius Vander Starr.
From 2008 through 2021, American International Group (AIG), a U.S. insurance corporation, saw varying total revenue. In 2021, AIG’s total revenue increased significantly from the previous year to exceed US$50 billion.
In recent years, AIG’s international revenues have stayed more consistent while their North American revenues have fluctuated. Because of its heavy reliance on general insurance, its vulnerability to catastrophic losses at an era of frequent natural disasters, and other market factors, according to industry experts, AIG is having trouble. The region with the most consistently high insured losses as a result of natural catastrophes, like Hurricane Harvey, has historically been North America.
Berkshire Hathaway, Inc: Property and casualty insurance, reinsurance, utilities, energy, freight rail transportation, finance, manufacturing, retailing, and services are all provided by Berkshire Hathaway, Inc. It operates through the following divisions: McLane Company, Manufacturing, Berkshire Hathaway Energy, GEICO, Berkshire Hathaway Reinsurance Group, Berkshire Hathaway Primary Group, Burlington Northern Santa Fe, LLC (BNSF), and Berkshire Hathaway Service and Retailing. Oliver Chace established the business, which has its headquarters in Omaha, Nebraska, in 1839.
In 2021, Berkshire Hathaway will have a total revenue of about US$276 billion, making it the largest insurance provider worldwide. The company was founded by Warren Buffet, the seventh-richest person in the world as of January 2022, and initially concentrated on making long-term investments in publicly traded companies. However, it now more regularly buys entire businesses. The company presently fully owns a number of active companies, including BNSF, GEICO, and McLane Company.
The value of health and life insurance premiums written by Berkshire amounted to approximately USD$6.3 billion in 2021, while the value of property and casualty premiums written by the company in that same year stood at approximately US$65.3 billion. In 2021, Berkshire Hathaway was ranked 10th among the 100 largest companies in the world by market value.
AXA Threat of New Entrants
Time to become establish: With the passage of time big players of the industry has developed portfolio of product worldwide and they owns huge resources to outperform new entrants quiet easily. This is evident from acquisition by these groups in history.
Axa Group’s Solvency Ratio of 217%, up 17 points from 200%, clearly demonstrates the strength of its balance sheet.
Government Regulations: It is exceedingly challenging for new businesses to enter the industry globally due to government regulations. The OECD Global Agreement on Corporate Taxation, the SFDR, the CSRD, and the GDPR are a few examples of complex legislation that can be studied. Additional state meddling, especially for players in Europe (e.g., restrictions on foreign cloud providers).
AXA Bargaining Power of Suppliers
Axa Group has extensive supplier policies, including a supplier code of conduct, sustainability standards for procurement, and general terms and conditions. In order to become recognized suppliers, suppliers must go through a process. The impartial third-party firm EcoVadis certifies suppliers with high order quantities. A platform with a global focus, EcoVadis, audits businesses’ entire supply chains. These considerations greatly diminish the supplier’s ability to negotiate.
AXA Bargaining Power of Buyers
Diverse and Large customer base: Customers have relatively little influence on businesses since major companies in the insurance sector have varied client bases, which increase customer trust and confidence in the company. The Allianz Group currently serves 126 million customers over more than 70 countries, while the Axa Group currently operates in 50 countries and has about 95 million clients.
AXA Threat of Substitute Products or Services
New Product Initiatives: Big group always continue developments , for example AXA Avenir Entrepreneurs, a new Unit-Linked Private Equity fund, was established in Life & Savings to provide clients with more options for portfolio diversification. Prior until this, institutional investors had exclusive access.
Additionally, AXA France introduced the “FondsCroissance” fund, which is open to all clients. In addition to offering the investors a 10-year maturity guarantee on their assets, this fund outperforms more conventional general account products.
Combination of product Range: Axa operates in Property &Casualty , Life &Savings and Health insurance segment so customers have complete range of product under one umbrella and these services are available globally, as Axa Region wise revenue shows, France €28.34 billion, Europe €32.82 billion, Asia €10.95 billion,Axa XL €18.53 billion and international € 6.40 billion
Acquisitions: Acquisitions and mergers always result in improved product portfolio control and, ultimately, less competition. Les MutuellesUnies, a group of provincial mutual insurance businesses in France, is where AXA had its start. After that, the business acquired GroupePresence in 1986 and a majority stake in National Mutual Holdings (Australia) in 1995. These purchases even continued practically year after year, and they represent the group’s continuous strategy.
References
- AXA Group Profile on Forbes,see link here |Forbes
- Allianz Profile on Forbes, see link here |Forbes
- AIG Profile on Forbes, see link here |Forbes
- Berkshire Hathaway CompanyProfile on Forbes, see link here |Forbes
- AXA Group Annual report from 1997 to 2022 see link here |AxaGroupOfficialWebsite
- AXA group: history and growth see link here |AtlasMagazine
- Regional breakdown of gross written premiums for AXA SA insurance worldwide in 2020 and 2021(in million euros) see link here |Statista
- Regional breakdown of gross revenue for AXA SA insurance worldwide in 2021, by product(in million euros) see link here |Statista
- Total revenue of Allianz Group from 2005 to 2021(in billion euros) see link here |Statista
- Operating profit of Allianz Group from 2005 to 2021(in billion euros) see link here |Statista
- Revenue of American International Group (AIG) from 2008 to 2021(in billion U.S. dollars)| see link here |Statista
- Berkshire Hathaway – statistics & facts see link here |Statista
- Allianz group official website see link here | Allianz
- Procurement & suppliers official website see link here | AxaGroup
- Axa Group Profile available at Fortune500
- Axa Group official website, about Axa| AxaOfficalWebsite