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BC World Wide Workshop Page PAGE 2 Insurance Break-Out Session December 12, 1996 BC World Wide Workshop Industry Break-Out Session Client Simulation Case Study Background The Firm has recently received a very broad Request For Proposal (RFP) from the Chief Executive Officer (CEO) of the newly formed Colossal Insurance Company (enclosed). Colossal was created through a highly publicized merger between Bedrock Insurance Company and Avant Guard Insurance International. The merger is of historic proportions in the insurance industry, creating a global enterprise capable of competing equally with leading insurers in all major markets. Based on publicly available information as well as Firm intelligence, we know the following: Bedrock Insurance Company An international life and health insurer, Bedrock is based in the United States, with increasing presence in the European markets. Bedrock has built its reputation by focusing on the large case life and health insurance market, providing virtually all lines of products. It has grown over the years by acquiring numerous smaller companies and blocks of business. This has created a strong business in the annuity, large case individual life and group employee benefits business distributed through a large network of General Agents. Although the company advertises its “World-Class” high-quality service, when asked for detail, the company was unable to provide any meaningful customer service costs or performance levels. The company has done relatively well on expense control given its service strategy, but current expense levels still run about 4% higher than industry averages. Revenue increases were dramatic in the late 80s and early 90s, but have been 15% below plan in the last 3 years. Bedrock was approached 2 years ago by Arthur Andersen to participate in an industry benchmarking study, but was unable to provide the detailed cost information required for the study. Although the company is profitable, based upon ou