SCENARIO:
The client was experiencing higher than average turnover which led to higher training and medical insurance costs.

DISCOVERY:
The high turnover and defragmented corporate structure made it difficult to control costs and create efficiencies in employee engagement and administrative processes.

THE GOAL:
Engage employees, improve benefits, and reduce costs. We provided a benchmarking analysis to align the reconfigured company with fewer employees to same-size peers in the industry and region. We conducted a bidding process to identify carriers who could provide competitive pricing and support, and we identified processes that could be outsourced reliably and cost effectively. Additionally, we performed a dependent audit where we found many ineligible dependents driving up claims and costs. Finally, we implemented a wellness system that incorporated financial and health wellness to help all of the employees become more engaged in their employee benefits program.

SOLUTION:
We provided a benchmarking analysis to align the reconfigured company with fewer employees to same-size peers in the industry and region. We conducted a bidding process to identify carriers who could provide competitive pricing and support, and we identified processes that could be outsourced reliably and cost effectively. Additionally, we performed a dependent audit where we found many ineligible dependents driving up claims and costs. Finally, we implemented a wellness system that incorporated financial and health wellness to help all of the employees become more engaged in their employee benefits program.

OUTCOME:
Bryson generated enough savings to:

• Offset the administrative costs of an online system,
• Lower the medical loss ratio from 120% to 78%, which created a zero increase in year two,
• Lower turnover, and
• Allow increased contributions to retirement plan for key executives.

Crushing Workers’ Comp Claims Impact Portfolio Company

Private Equity Firm Turns to Bryson for a Solution Other Brokers Wouldn’t Consider

CLIENT:
Private equity firm and its portfolio company, a $40 million industrial services business

SCENARIO:
The portfolio company was literally hemorrhaging dollars due to out of control workers’ comp claims and an existing “loss-sensitive” program (premiums are affected by claims). The rising workers’ comp claims were bordering on unaffordable and the company could not continue paying them. The company’s PE firm turned to Bryson for a solution.

DISCOVERY:
The portfolio company was 18 months into a 36-month contract and the loss-sensitive premiums were crushing. At the start they wanted to explore a “Captive” (self-insured program) or a high deductible plan, but had concerns about exiting the existing contract. Bryson conducted due diligence on loss runs, financials, and took a deep dive into the existing policy as well as visits to plants in New York and New Jersey. We soon discovered the portfolio company really didn’t understand the complexity of the current plan and the financial impact was going to get worse – much worse – before it got better. Each month they would receive an invoice for a different amount with a 20-page summary attached. This current program was unworkable.

SOLUTION:
The portfolio’s company’s challenging financial statements and negative claims history made finding a solution difficult. After considering a variety of options, our private equity team zeroed in on a PEO solution with its favorable workers’ comp master plan. The professional employer organization is generally looked down on by most insurance brokers because traditionally PEOs are equated with a reduction in commissions. We evaluated what was best for the client, and after tough negotiations with a favorable PEO option, we presented the client with an out of the box solution that reduced costs and streamlined administration.

OUTCOME:
After careful research of all options, we installed a highly favorable PEO solution for the portfolio company, an option no other insurance broker would offer. We were able to help them plan for an exit from their current plan and we negotiated with the PEO to reduce its commissions for additional costs savings. Lastly, Bryson installed its Performance Edge program that reduced commissions even further, compensating Bryson in the future based on additional cost savings. This ensured an immediate “win” for the portfolio company and promotes cost reduction into the future.

Reducing Private Equity Partner Taxes While Accelerating Savings

Bryson Delivers Creative Retirement Solution to Private Equity Firm

CLIENT:
Seven person private equity firm with four partners and three employees

SCENARIO:
With revenues and the subsequent tax bill growing, the partners were looking to substantially decrease taxes while accelerating retirement savings.

DISCOVERY:
Bryson reviewed the private equity firm’s current 401(k) plan and found the partners were getting hit with significant income tax and were starting to fall short of their retirement goals.

SOLUTION:
Bryson explored all options and ultimately executed a Cash Balance Plan which allows for rapid retirement funding based on age, years of service, and salary. While working within IRS limits, the plan is designed to benefit partners by directing roughly 95% of the annual contributions towards their own retirement accounts.

THE NET EFFECT:
• Each partner was now able to contribute $329,000 annually on a tax-deferred basis for the next 5 years. At a roughly 40% tax rate, they each saved over $130,000 annually on taxes. Over 5 years, this amounts to nearly $660,000 in tax savings.

• The partners were able to accelerate their retirement funding and can now comfortably hit their individual targets. Per IRS regulations, they may be entitled to accumulate up to $2.735 million at retirement in the Cash Balance Plan alone. This will provide estimated income of over $135,000 per year in retirement.

• While approximately 95% of the benefits are allocated to the partners, the employees benefit from the continued goodwill of contributions to their retirement accounts as well. Having such a plan in place also becomes leverage in attracting and retaining staff.

These case studies are for illustrative purposes only to provide an example of the firm’s process and is not representative of all the firm’s clients or client experiences.