Assurances Générales de France

87, rue de Richelieu
75113 Paris Cedex 02
France
Telephone: +33 1-44-86-20-00
Fax: +33 1-44-86-29-60
Web site: http://www.agf.fr

Public Company
Incorporated: 1818 as Société Anonyme des Assurances Générales
Employees: 34,000
Operating Revenues: EUR 18.28 billion ($22 billion) (2003)
Stock Exchanges: Euronext Paris
Ticker Symbol: AGF
NAIC: 524113 Direct Life Insurance Carriers

Assurances Générales de France, or AGF, is one of France's oldest and largest insurance companies, offering a full range of insurance products and financial services to the private, commercial, and government sectors. Present in more than 20 countries worldwide, with a workforce of more than 34,000 people, AGF is particularly strong in Belgium, the Netherlands, and Spain, and also has a significant Middle East and South American presence. AGF's primary operations are in the life and health insurance sector, which accounts for 41 percent of the group's EUR 18 billion in annual revenues, and in the property and liability sector, which adds 38 percent to AGF's revenues. Other areas of operation include financial services (10 percent) and credit insurance and assistance (11 percent). France remains the company's largest single market, at 65 percent of revenues. Despite the company's worldwide presence, Europe remains its major market, combining to reach 92 percent of sales. Hit hard by the economic slump beginning in 2000, AGF has moved to streamline parts of its business, such as selling off its subsidiaries in Brazil and Chile, as well as its banking operation in Belgium, and divesting its majority stake in property lending wing Entenial in 2003. AGF itself is majority controlled by Allianz, the leading insurance group in Europe. Yet AGF, listed on the Euronext Paris exchange, has retained much of its autonomy under Chairman and CEO Jean-Philippe Thierry.

Founding the French Insurance Industry in the 19th Century

Emerging from the chaos of the French revolution, France found itself lagging behind as the insurance industry developed into a potent financial force in the neighboring European economies. Yet the relative calm of the Restoration period, starting in 1815, enabled the emergence of an insurance industry within France that would ultimately develop into the world's fourth largest domestic insurance market.

An important factor in the creation of the French insurance industry came from the return of many of the country's nobles and their families, who had fled the country during the revolution. Educated in the other European capitals, and especially in London, the émigrés brought with them a background in British-styled insurance methods. Among them was Auguste de Gourcuff, who had began lobbying the French government for permission to launch the first modern French insurance company.

Gourcuff found support from a number of prominent bankers of the time, and particularly Martin d'André, who had built up one of the country's largest trade and banking empires. With backing from d'André and others, Gourcuff led the formation of a new company, Société Anonyme des Assurances Générales in 1918. The company quickly developed into an umbrella for three primary components: Compagnie d'Assurances Générales Maritimes, la Compagnie d'Assurances Générales contre l'Incendie, and la Compagnie d'Assurances Générales sur la Vie, which received authorization to begin business in 1819. This marked the first time the three most prominent branches of the insurance industry—marine, fire, and life—were combined into a single organization in France.

Les AGF, as the company came to be known, received official support from the French government under King Louis XVIII and quickly gained a leading position among the country's growing number of insurance companies. Among these was another major insurance group, founded in 1820, la Compagnie Française du Phénix. That company remained les AGF's main rival for the leadership of the French insurance sector until the middle of the 20th century—at which time the two companies merged into a single entity.

Gourcuff, a native of the Brittany region, brought in fellow Breton and protégé Alfred de Courcy to take over direction of the company toward the middle of the 19th century. Together Courcy and Gourcuff developed a number of innovations in the French insurance sector, such as the launch of employee pension and protection plans, starting in 1844, that later became a key component of the French social security system.

Les AGF continued to develop new insurance products as well. Responding to the changing economic and social landscape brought on by the Industrial Revolution, les AGF launched a range of new policies, covering such events as railroad accidents and gaslight explosions. Originally confined to the trading sector, les AGF led the extension of insurance coverage into a broader market, adding agricultural insurance policies—a popular policy offered protection against damage brought on by hailstorms—and policies spanning the wide range of newly developing industries and machinery.

The new insurance markets and products attracted a steadily increasing number of new players into the industry. Les AGF found itself facing rising competition, not only from the new entries but from such major rivals as La Phénix and other prominent companies founded during that period, including GAN and UAP. In response, the company became one of the first in the insurance sector to invest in newly developing advertising techniques. As a result, the company quickly became one of France's most well-known brands.

Surviving Nationalization in the 21st Century

The turn of the 20th century brought new changes to the French insurance industry as it moved to its modern form. Laws promulgated at the end of the 19th century required employers to insure workers against industrial accidents as well as provide other social protections. The insurance industry responded by developing a whole range of products, policies, and services to the country's industrial and corporate sectors. Yet the administration of these policies by private companies led to a great deal of complaints and worker unrest. In 1910, the French government took over the workers' indemnity sector.

Instead, les AGF and other insurance groups, including La Phénix, began developing a whole new category of insurance products. Whereas les AGF, like other insurance companies, had previously targeted the nation's industries and wealthy for its clientele, in the early decades of the 20th century, it now began to create a new class of consumer-oriented policies and services. This trend picked up especially with the beginnings of the development of the French social security system in the 1920s and under the Front Populaire government of the 1930s. During this period, les AGF introduced policies offering health insurance and accident and theft insurance. The company's clientele extended to include customers from a variety of social backgrounds.

If France's insurance companies thrived during the interwar period, the sector was threatened with complete collapse as the country emerged from World War II. In 1946, therefore, the government under General Charles de Gaulle passed new legislation nationalizing nearly all of the French insurance sector, including its 25 largest players. Les AGF now became owned and operated by the French government. The government then reformed much of the insurance sector, creating the new social security system covering health, accident, and retirement benefits.

The next major step in AGF's evolution came in 1968, when the French government decided to merge its nationalized insurance companies into just four large-scale companies. The move marked the emergence of national heavyweight UAP, GAN, and MGF-Mutelles du Mans. It also created a "new" AGF, composed of the former Assurances Générales and rival La Phénix.

In the 25 years that followed, les AGF developed a distinct identity among its sister insurance companies. Starting in the 1970s, les AGF became the spearhead for the French government's drive to create a global insurance giant. As such, les AGF launched a drive into a number of foreign markets, capturing strong positions in Belgium, Germany, the Netherlands, Switzerland, and Spain in Europe, and building up positions in a number of Middle East and North African markets, including Egypt, Lebanon, and Tunisia. The company also entered the South American market, with holdings in Chile, Argentina, Brazil, Colombia, and Venezuela.

In the 1980s and early 1990s, les AGF went on a buying spree, building up a leading position in the industrial insurance sector, and acquiring such entities as Coface, which provided insurance and financial services to the government, and the insurance group SCOR. Part of the stimulus behind the company's growth drive was the promise of its coming privatization. The company had originally hoped to be released from government control during the Socialist-led government's privatization efforts in the mid-1980s. Les AGF appeared slated for privatization in 1987, but was passed up in favor of other government holdings.

The French government nonetheless reduced its stake in Les AGF, down to just 51 percent in the mid-1990s. In the meantime, les AGF had joined in the jockeying for position among Europe's insurance industry, as it prepared for the lowering of trade barriers slated for 1992. As part of its effort, les AGF began wooing Germany's AMB Aachen Munchen, the country's third largest insurance company, ultimately acquiring nearly 35 percent of its stock.

Company Perspectives:

Our vision: We are a group of companies offering services that protect and prepare our customers, their families, investments, incomes and business for the future. These services are in insurance, assistance, finance and related areas that allow us to render services and quality. Our services in these three areas are intended to expand so we can better respond to the customers' needs.

Les AGF's turn to be privatized finally came in 1996, when the French government agreed to spin off its share in the company to the public market. Flush from its successful listing, AGF began making plans to boost its position in the French market. In 1996, for example, the company acquired majority control of SFAC, originally founded in 1927. That company was renamed EULER under AGF. Yet in 1997, AGF shortly became the target of a hostile takeover attempt by Italy's Generali.

AGF at first sought a partner in France to help it fight off Generali's advances. In November 1997, the company agreed to acquire Worms et Cie in order to gain control of its insurance group, Athena, then the 12th largest French insurance company. Athena had been formed in 1989 through the merger of PFA, owned by Worms, and the GPA. By the end of that year, AGF had completed its acquisition of Athena. Yet AGF required a still larger partner in order to defeat the Generali bid. The company then began looking beyond France, and fell into the arm of Germany's Allianz.

Allianz itself had been seeking growth, particularly after it lost its position as European insurance leader following the merger of two French companies, AXA and UAP. Allianz's offer proved more attractive—in large part because Allianz agreed to take only a minority stake in Les AGF as well as a minority position on its board of directors. At the same time, les AGF was to operate autonomously within the Allianz empire, with its own chairman and CEO and exclusive responsibility for key geographic areas, including France, Belgium, the Netherlands, Spain, and other countries corresponding to les AGF's international profile.

The appearance of Allianz as white knight led to intense negotiations among the various players, including the French government, which was unwilling to allow certain parts of les AGF, and especially its holding in Coface, fall into the hands of foreign owners. The talks ultimately resulted in what some considered a splitting in two of Les AGF. The company agreed to cede Coface to the French government, and its stake in AMB Aachen Munchen to Generali. At the same time, the recently acquired Athena insurance group was divided into its component parts, with AGF retaining PFA and other parts, and Generali taking the GPA operations. Generali then agreed to relinquish its own stake in AGF.

The "new" AGF now found itself one of the primary subsidiaries of Europe's leading insurance group. With the addition of the former Athena operations and the French operations of parent company Allianz, les AGF claimed the position as the number three French insurance company.

At the turn of the millennium, les AGF began exploring new frontiers. As part of that effort, the company began repositioning itself for the growing e-commerce and Internet markets, developing a new series of insurance products—focusing especially on providing credit transaction insurance and assistance policies and services. Les AGF also targeted entry into the financial services market, launching its own assets management services through subsidiary Banque AGF. In 2002, the company changed its name, to AGF, in order to highlight its new, more unified status.

AGF continued to eye international expansion within the larger Allianz group. In 2001, for example, the company acquired the Netherland's Zwolsche Algemeene Europe, as well as its subsidiary The Hartford Luxembourg (THL), sold by U.S.-based Hartford Group. The following year, AGF acquired the recently formed Euler Hermes, combining AGF's and Allianz's credit insurance operations into a single entity.

The difficult economic situation at the beginning of the 2000s led AGF into losses by the end of 2002. In 2003, the company began a restructuring, which included shedding a number of its operations, including its holdings in Brazil and Chile. The company's restructuring continued into 2004, when it received permission from the French government to sell off its majority stake in its property lending operation, Entenial. These moves helped AGF restore its profitability. After nearly 200 years, AGF remained a powerful force in the French—and world's—insurance industry.

Principal Subsidiaries

Adriatica de Seguros (Venezuela; 96.97%); AGF Afrique; AGF Allianz Argentina Generales (Argentina); AGF Asset Management; AGF Assurances Financières; AGF Belgium Insurance (94.19%); AGF Immobilier; AGF International; AGF La Lilloise; AGF Life Luxembourg (94.19%); AGF Vie; Alliance Nederland Groep; Allianz Seguros y Reaseguros (Spain; 48.31%); Arcalis; Astrée (Tunisia; 42.08%); Banque AGF; Calypso; Colombiana de Inversion (92.82%); Compagnie de Gestion et de Prévoyance; Coparc; Elmonda (Mondial Assistance) (Spain; 50%); Euler Hermes (70.46%); Génération Vie; La Rurale; Les Assurances Fédérales; Mathis Assurances; Phénix Vie (Switzerland); Protexia France (65.99%); Qualis; Société Nationale d'Assurances (SNA SAL) (Lebanon; 56.15%); Spain; W Finance.

Key Dates:

1818:

Société Anonyme des Assurances Générales (AGF) is founded by Auguste de Gourcuff, Martin d'André, and others.

1846:

AGF launches first social security policies.

1946:

Nationalization of French insurance industry by French government under Charles de Gaulle.

1968:

AGF is merged with another nationalized insurance company, La Phénix, creating Les AGF.

1996:

French government privatizes Les AGF.

1997:

After hostile takeover attempt by Generali of Italy, AGF acquires Athena Assurance then agrees to be acquired by Germany's Allianz.

2001:

AGF acquires Zwolsche Algemeene Europe from Hartford Group.

2002:

AGF acquires Euler Hermes credit insurance company.

2003:

AGF restructures, selling off Chile and Brazil holdings.

2004:

AGF sells off property lending business, Entenial.

Principal Competitors

American International Group Inc.; AXA Insurance PLC; China Insurance Company Ltd.; Fortis; AEGON N.V; Aetna Life Insurance Company of America; Prudential Financial Inc.

Further Reading

"Assurance Generales de France May Sell Off Its Stake in Frank Bank Entenial to Credit Foncier de France," Euroweek, July 25, 2003, p. 10.

"French Insurer Posts 63% Fall in 2002 Profits," Euroweek, January 5, 2001, p. 33.

Kielmas, Maria, "AGF Making Bid for Worms et Cie," Business Insurance, October 13, 1997, p. 25.

——, "France Putting AGF up for Sale," Business Insurance, May 13, 1996, p. 17.

Fabre, Thierry, "L'impossible privatisation des AGF," L'Expansion, September 4, 1995.

Schmid, John, "Allianz Makes $10 Billion Bid for AGF," International Herald Tribune, November 19, 1997, p. 15.

—M.L. Cohen