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SUCCESS STORY: INSURANCE
CLIENT:
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Major Insurance Company |
DIVISION:
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Corporate Center |
CONTACT:
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Vice Chairman and CFO
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MAJOR FUNCTIONS:
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All Corporate Functions |
SITUATION:
The client has three principal lines of business -- Health Care,
Financial/Retirement Services, and International Insurance -- and
each is very decentralized and autonomous. As well, certain
infrastructure functions are centralized into what is called the
Corporate Center. These units collectively have annual spending
of approximately $850 million. Management wanted to cut at least
$30 million from the annual run rate but previous attempts did
not meet management's expectations for results. The client's new
Vice Chairman initiated a Corporate Center Review Program, which
LoBue was asked to manage and support. The team was challenged
to find the aforementioned savings.
LOBUE RECOMMENDATIONS:
Information Management And Technology:
- In Network & Distributed Services, efficiency was improved
by reducing the time help desk representatives sat idle and by
reducing call volumes through single sign-on access; revising
password reset parameters and reducing the frequency of software
upgrades. Spans of control were increased and staffing to
benchmarked standards was recommended.
- A redesigned Quality Assurance model was implemented, that
more appropriately addressed high criticality/risk initiatives
during the development life cycle, driving improvements in IT and
business units.
- Mainframe installation and customization units were
consolidated to eliminate duplicative efforts. Further, distinct
groups in mid-range performance monitoring were integrated to
optimize job scheduling and reduce functional overlaps.
- Centralized project management and a redesigned management
process were recommended, creating substantial reductions in
manpower.
Business Shared Services
- Hospitality and Travel were streamlined through a reduction
in manual and administrative tasks. Both adopted operations to
improve their bottom lines while enhancing service.
- Purchasing process changes reduced FTEs, expedited
deliveries and leveraged technology and vendors.
Legal
- The Corporate Secretary function was merged into the office
of the General Counsel. Previously the Corporate Secretary also
supported individual shareholders; a responsibility shifted to
Investor Relations.
- Legal and Controllers both housed Tax units that provided
internal counsel and strategy. These units were combined to
unify strategy, eliminate duplicative research, and maximize
synergies. In addition to FTE savings, the combined unit offers
a consistent tax strategy and fewer contact points for users.
Human Resources And Corporate Communications
- Vendor Management of Advertising Media, Executive Search,
Outplacement and Temporary Firms was initiated to reduce the
total number to a more manageable level and leverage the client's
buying power.
- Staff Optimization in a centralized HR service center
identified significant FTE savings.
- Benefit costs were reduced by a revision in the 401K Vesting
Schedule to market terms, yielding significant savings while not
impacting current plan participants.
- The large volume of Communications pieces distributed
throughout the organization were consolidated, eliminated or
electronically communicated for "essential" messaging.
Finance, Administration And Investment Management
- Controllers renegotiated a 10% reduction in the fees charged
by the external auditors. Functions within Controllers were
redesigned, centralizing some services and strengthening Treasury
processing.
- Internal Audit was redesigned, hotelling was implemented,
and professional auditor staffing models provided FTE and expense
savings.
- Internal Investment Management downsizing was accommodated
through the use of strategic outsourcing, combining back office
functions and redesigning portfolio management in expectation of
declining volumes.
REAL RESULTS:
The client benefits from this engagement were a streamlined
centralized infrastructure and annual expense savings in excess
of $100 million. The entire organization benefits from the
reduced corporate overhead.
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