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The case describes the economics of the non-life insurance industry and the strategic issues that competitors are facing in 2001. Issues include overcapacity, deregulation, new entry and competition, consolidation, and declining industry profitability. Despite the apparent absence of economies of scale, some firms have started to consolidate the industry. After a discussion of the industry economics, the case describes the strategy of a key player: the French firm AXA (past strategy and current issues). This financial services case allows a discussion of several strategy topics: (1) economic consequences of deregulation and strategic responses of incumbents and new entrants; (2) drivers and consequences of cyclical overcapacity; and (3) drivers and impediments to European consolidation in an industry that has historically been very fragmented and where strong economies of scale have not been observed. The overcapacity cycles are to many students very surprising and the case allows an interesting discussion of drivers and possible solutions. The teaching note was written by K Cool and C Angoulvant. A supplement is available to accompany this case.