In 2013, one of Canada’s largest publicly traded companies, though very successful, was looking to find financial efficiencies and optimize meta commercial and operational priorities for its benefits program. Stem was engaged to deliver an in-depth market study to achieve those objectives.
At the time, the company was composed of multiple corporate entities, affiliates, and franchisees, each with its own unique benefits program, administrators, and separate profit and loss systems. A global broker was already serving the company when they retained Stem to serve as the lead advisor in this area.
Using industry knowledge to negotiate an expert agreement
Stem provided senior-level counsel on institutionalizing and negotiating an enterprise-level financial agreement with predetermined maximums on per capita cost increases. They also established a Master Service Agreement that created long-term financial and service certainty. Finally, Stem activated a stewardship framework that focused on forward-looking programs and commercial opportunities.
This assignment required deep expertise in key functional and technical disciplines, capital markets, and a strong background in negotiating with senior-level executives from insurers and reinsurers. Stem was able to deliver an overarching program that met the strategic priorities of the client and helped the insurers and reinsurers acquire scale as a key advantage.
Adding value and skyrocketing savings
With their comprehensive plan, Stem helped this client add $212 million in enterprise value by delivering $0.035 earnings per share. There was also a 20% reduction in administration costs that could be tied directly to this work, with multimillion dollar savings in fees, reserves, and interest rates.
Stem also helped negotiate a substantial cash credit for the transition to a new benefits program, as well as a dedicated services team with the client’s authorization on personnel changes. This resulted in significant improvement in service and technology along with material financial guarantees for non-performance.