Developing a new risk profile and strategy after a merger of Tech companies

The Challenge

A large technology company client merged with another equally large company that was not an existing Marsh client. An important challenge faced by the combined entity was the need to quickly understand its new risk profile and develop an optimal risk strategy, balancing the trade-off between the cost of insurance and protection against volatility.

The Solution

Our industry-leading risk analysts and specialist data scientists, leveraged Blue[i] Risk Finance Optimization Analytics, our digital solution, to bring a quantitative and analytic approach to this challenge. Using insights from the solution, the Marsh team developed a powerful and tailored risk strategy for the new combined entity.

Starting with our client’s internal assessment of their risk exposures, we undertook our own quantitative analysis. We analyzed historical losses, current premiums, projected losses and risk for each of the individual companies, as well as for the merged entity. Our future risk assessment included far-reaching 1 in 100 and 1 in 200 year events that could impact risk coverage needs.

Blue[i] RFO Analytics unlocked actionable insights, allowing our client to make informed decisions across their entire risk portfolio. An in-depth analysis of gaps and opportunities along with real-time scenario modelling allowed us to determine our clients risk appetite on the spectrum of reducing cost versus volatility. It also allowed us to successfully address the key questions shaping the risk strategy:

• What is the impact of changing limits on the insurance program, and how would a lower-limit coverage impact the combined portfolio?
• Would this new alternative approach align with our client’s overall strategy and willingness to take risks?
• With this new risk structure, could they maintain, or ideally improve, the overall value they receive from their insurance portfolio?

Finally, the Blue[i] RFO Analytics insights helped shape the risk program for the combined entity.

The Results

The insights from Blue[i] RFO Analytics helped the client achieve a10-20% savings in premium increases in the context of a rising rate market.

We worked with the client to identify further efficiencies, including the removal of excess liability limits, that were statistically unlikely to be used.

And crucially we demonstrated to the client that they could maintain confidence in their risk coverages at their first renewal as a combined entity.

A modern approach to risk management

Blue[i] Risk Finance Optimization Analytics provides real time and actionable insights to help you make informed decisions across your risk portfolio. With loss projections tailored to your unique risk profile, you are able to adjust your strategies and assess your risk appetite at both the portfolio and product line level. Assessing your risk appetite, exposure to insurable risk, cost of capital, and cost of insurance allows you to determine how different program options would impact your organization. You can get the comprehensive answers you need, when you need them, and view analytics tools and modeling in real time.

Like all our solutions, Blue[i] RFO Analytics is backed by Marsh’s experienced team of specialists, who leverage insights from our data to work with you on customized strategies and approaches for your business.