Responding to Cyclical Volatility
The CEO of a large property and casualty insurer was troubled by the cyclical swings inherent in the core business. He sought help in creating a strategy for introducing and expanding products designed to dampen the volatile nature of the business.
Over a five-year period working with the CEO and top management, SDG spearheaded new and expanded business initiatives that generated an average of $350 million of new value per year.
SDG and the management team considered a number of alternatives and businesses that had the potential for strong earnings growth, were complementary with the core business, but had counter-cyclical characteristics. From the alternatives, the team identified two existing business areas that promised major growth through strategic re-emphasis. The team also identified an area that would attract new capital and customers. By working with the client to turn each of these business areas into major earnings contributors, we achieved a portfolio effect, providing more stable earnings growth while attaining rapid overall business growth.
In other engagements for this client, we:
- Designed new operating and capital budgeting systems and developed and managed a training program to introduce the new system throughout the corporation
- Directed the turnaround of an unprofitable subsidiary and conducted a comprehensive operational and strategic review of its large claims function
- Directed a comprehensive change program to implement best practices, resulting in new organizational options and improvements to daily operations.
