1997ReportActivity3MessagefromJacquesFriedmannandClaudeBébéar4TheAXAGroupin19979Profile10Groupmissionstatement11Peopleandstructures12Simplifiedorganizationchart141997Operatinghighlights16AXAanditsShareholders18Worldwidepresence20AXAanditspeople22Financialhighlights24Reviewofoperations29Insurance30Internationalbusinesses43Reinsurance44Assetmanagementandfinancialservices45Consolidatedbalancesheets48Consolidatedstatementsofincome50Addresses51Contents4MessagefromJacquesFriedmannandClaudeBébéarGROUPSHAVEINDUSTRIALAIMS,WHILECONGLOMERATESHAVEPURELYFINANCIALONESAGroupcanexerciseseveralbusinessactivities,providedthattheypoolexpertiseinwhichtheGroupiswillingtoinvestoverthelonghaul.Aconglomeratealwaysexercisesmanybusinessactivitieswhich,inmostcases,havenothingincommon.Thebusinesspurposeofaconglomerateistoenhancethevalueofeachofthesebusinessesinordertobeinapositiontosellanyoneofthemwhenthetimecomes.Conversely,aGrouponlyexitsfromamarket,orphasesoutabusiness,whenthereisanindustrialimperative–anofferthatisattractivefinanciallyintheshortrunisnotasufficientreason.Aconglomeratedoesnotseektofostersynergiesamongcompaniesbecausefewsuchsynergiesexistandtheytaketimetogel.Itsroleislimitedtoseekingthebestpossibleexecu-tivesforitssubsidiariesandensuringthat,strategicallyspeaking,thingsareontherighttrack,andthatoperationsarerunsoastogeneratemaximumprofitability,particularlyintheshorttomediumterm.Becauseitinvestsinitsbusinessesoverthelongrun,aGroupcan–andmust–gofurther.Ithasthetimeandhencetheopportunitytoorganizesynergiesand“cross-fertilizations”whichenhancethefinancialperformanceofallitscompanies.AGroupmustseekoutthatwhichcanbepooledtoimprovetheperformanceofall.Becausetheyare“industryprofessionals”,itsexecutivesshouldpossesstheindustrialknow-howthatenablesthemtomaketheirsubsidiariesmoreprofitableandcompetitiveovertime.Long-termstrategicplan-ning,technicalexpertise,marketing,theabilitytomotivateemployeesandanticipatemarkettrends–theseareasimportanttomanagersasshort-termprofits.AXA,adecentralizedGroup5Inotherwords,aGroupismoredemandingthanaconglom-erate:itsgoalistoturninaconsistentlygoodfinancialperform-ance,overthelongaswellastheshortterm,notbystriking“deals”hereandthere,butbydevelopingtheknow-howofallitsmenandwomen,motivatedbyacleardefinitionofobjectives.AXAhaschosentobeaGroup.Itscorebusinessesareinsur-anceofalltypes,includingassistance,reinsurancewhich,techni-cally,isincreasinglytiedtodirectinsurance,andfinancialservicesrelatedtoinsuranceknow-how.Inparticular,thislastincludesthebundlingandmanagementofassetssince,byitsnature,aninsurancecompanyisamajorassetmanager.ButAXAisaninternationalGrouppresentinmorethan50countries.Thisposesacomplexorganizationalproblem.Whatcanwedototakeadvantageofthisinternationalstaturewhileremainingflexibleandontheplayingfieldineachofourmarkets?Shouldwebecentralizedordecentralized?Infact,thesolutiondependsonwhetherwe’retalkingaboutglobalordomesticmarkets.Inworldmarkets,bordersandnationalcharacteristicsareoflittleimportance.Manydecisionsarevalidfortheentireworldandthuscanbecentralized.Strategy,products,someaspectsofmarketing,andindustrialprocessesarethesametheworldover.Aproductmanufacturedinonecountrycanbesoldinothercountries.Theonlyfunctionswhichvaryfromonecountrytoan-otherarehumanresourcemanagement,localmarketing,andpossiblyrelationswithlocalgovernments.For...
