If the trend toward insurance company consolidation seems to be coming at insurers like a "merger monster," it doesn't mean you should call in the National Guard. It just means that when a merger crashes in on your company and your department, it's bound to be unwieldy, a little scary, and impossible to outrun. How you survive it, on the other hand, will depend in part on the role your company plays in the deal: Are you the hunter or the target? The acquirer or the acquired?
The acquiring (or dominant) company is certain to face a long, hard struggle to integrate traditions and processes after the deal goes down. The fate of the acquired is less certain: It might get bigger and stronger-or it might simply disappear.
In the insurance industry, the merger monster has stomped a path through the life companies and is now moving on to the property/casualty insurers. Not that the trend is limited to insurance: The Wall Street Journal reports that by mid-1996, corporate merger-and-acquisition activity across all industries was well on its way to beating last year's unprecedented $502 billion worth of deals.
"It's classic consolidation," says Jim Kroner, senior vice president and treasurer of American Re-Insurance in Princeton, NJ, "caused by fundamental economic problems: too much capacity, not enough profit, and increased competition. These lead to depressed margins and an inability to grow. So companies must grow by acquisition."
What's new, he adds, is that "we're beginning to see pure consolidations, where one company buys another and that company just disappears. For a long time, people thought it was impossible [to combine] the different systems, different agency forces, and different products [of two insurance companies]."
If it's not impossible, it's certainly the biggest challenge most insurance companies will ever take on-and the greatest uncertainty home-office employees and agents will ever face. Cast in the central role of merger-monster management is the conference planner.
The Information Source Meetings are among the very first issues to come to the fore during the merger process (there's the announcement meeting to plan, just for starters), with meeting planners simply having to grab the merger bull by the horns.
Take Pat Pagliuco, CMP, manager of meeting planning at The CNA Insurance Companies in Chicago. At the end of 1995, CNA announced its acquisition of the Continental Companies based in New York City, the first major property/casualty deal to fall into Kroner's "pure" consolidation category.
In the months after the announcement, says Pagliuco, "the only people who had a database of the two companies' officers were those of us in the meeting department. We had human resources coming to us [for information]."
The database was created out of necessity when Pagliuco and her six-person department were given two weeks to plan a meeting for the companies' two sets of officers-about 500 people. "We had to go to individual department heads and find out who should be invited," Pagliuco says. "Even then, people came up to us at the meeting and said, 'I'm supposed to be here.' We had to take their word for it."
That was the least of the challenges. Once Pagliuco had the list, she and her staff sent out their standard fact sheets to book room and air for attendees. "Well, then the questions came in," she says. "Continental had handled it all very differently. Some people didn't even send [the sheets] back, so we had to do follow-up. We had other people calling the hotel looking for a confirmation.
"There was a whole education and awareness process that had to take place on both sides." And fast. While most departments were still assessing the mer-ger's impact, the meeting department was living it.
Pagliuco got no increase in staff, even though she estimates that the department's activity level increased 75 percent around the time that the merger deal was closed. Her department, which consists of four full-time meeting planners and two coordinators, was three times the size of Continental's planning staff. The Continental meeting planner was offered a position, Pagliuco says, but turned it down in order to remain in New York.
For that initial officers' meeting in April, Pagliuco used the Palmer House in Chicago, a regular CNA venue with which she had a long-standing relationship. (She had also used the Palmer House for a 900-person merger announcement meeting, which she'd had three days to plan, including an audio broadcast to four regional offices and 40 branch offices.)
The second officers' meeting, in June, saw attendance rise to 600 people-twice what Pagliuco had contracted for back in May 1994, when she booked what she thought would be a regular officers' meeting at the Marriott Chicago. "We could only provide five-week notice to the hotel," she says, "but they did an incredible job working with us. We did a lot of juggling to find large chunks of space. We set rooms up theater-style instead of in rounds; we used lazy Susans instead of buffet tables. We had to get very creative without inconveniencing the attendees."
Sending the Merger Message The attendees' impressions are critical, and those early meetings take on an importance that goes beyond their content. Under the inevitable cloud of uncertainty that hangs over agents of both companies after a merger announcement, the dominant company is often perceived as a threat. Sending a message to the field about the new, merged entity is therefore a priority for senior management.
In the case of Massachusetts Mutual Life Insurance Company, which late last year merged with Connecticut Mutual Life Insurance Company, Diana Ruddick, Mass Mutual's second vice president of field communications and conferences, was called upon to pull together a meeting of the top 100 agents from each company for a meeting dubbed The Top 200 Fly-In.
"It was a way to touch those top agents and get them committed to being a part of the new company," Ruddick says of the quickly planned conference. "At that point, the new name had been determined, Mass Mutual-The Blue Chip Company, and we knew the headquarters would be in Springfield [MA]."
So that's where the meeting was held. To facilitate producers interacting with managers and home office staffers on the opening afternoon of the one-and-a-half-day meeting, Ruddick and her team set up seven or eight "grazing" rooms, as she calls them. The agents could wander in and out of the rooms, meeting people, getting handouts and gifts, and learning about the company.
For that night, Ruddick planned a dinner at the Springfield Museum of Fine Arts. The sit-down banquet was preceded by a cocktail party with setups in several different rooms, again encouraging mingling. The following morning, the 200 agents got a high-level preview of the combined company's product portfolio. "We were planning 85 office visits to do product training," Ruddick says. "This was a way to get the big producers on board first."
And the big hitters, presumably, would bring the message back to the field.
The Top 200 Fly-In was the first of five meetings in the first half of 1996 held for the top echelon of the new, combined field force of Mass Mutual-The Blue Chip Company. (The new company picked up Connecticut Mutual's former tag line.) Ruddick, who, with her department, planned and attended all five meetings, comments on their effect on the agents: "At each meeting, you could see relationships building, walls being broken down, messages being heard, and apprehension easing."
Combining the Big One However, all of those were but a lead-in to the major event of the year: The Leaders Conference in July, which would bring together the top 20 percent of the field force. With attendees coming from both companies, Ruddick expected a whopping 3,500 attendees, including agents and families. But if the increased size had been the only challenge, it would have been simple enough. Just find a big, capable property.
But size was only the last in a long list of challenges. First, both companies already had booked their major incentive meetings for 1996. Mass Mutual was heading for Chicago in August; Connecticut Mutual to Orlando in March. Despite these plans, the question of whether to continue the meetings separately if the merger went through was barely considered, Ruddick reports. "Early on, management at Mass Mutual decided that we would not get the potential power of the combined field forces if we kept the meetings separate," she says. "They wanted to integrate as soon as possible."
So, half a year out from each company's planned incentive conference, Ruddick had to play a game of chicken with the merger process. As summer progressed, both companies were "heading into huge cancellation penalties" at the properties they'd booked, she notes. "We had a lot of discussions. We didn't know if we'd even be merged by the time of the conference. In the early feasibility stages, the two companies don't know what they're going to uncover. It was a tough time, a sensitive time. Connecticut Mutual had promised a huge family conference in Orlando and people were already making vacation plans around it.
"Meanwhile, our field force had been to Orlando the previous year. They were expecting Chicago."
In the end, no one got what they expected. But, thanks to Mark Kustwan, Mass Mutual's director of conference planning, Ruddick says, both companies got out of their previousgracefully and the new company was able to book space at Opryland Hotel Convention Center in Nashville.
"Mark took the lead in. He really works his contacts well," Ruddick says. "He had to be careful. Mass Mutual had never canceled a meeting. We had to preserve our relationships and our reputation." Having done that, the next challenge was to find new space-big space. "Again, the advantage of working with someone like Mark is he knows all the properties and he keeps abreast of what's happening." Opryland, with its new Delta addition planned for a June opening, took the business.
But what would a combined conference look like? Connecticut Mutual's or Mass Mutual's? Neither Ruddick nor Connecticut Mutual's conference manager, Mary Anne Fleming, could make even the most basic assumptions. "We had to come to agreement on who the decision-makers were above us," Ruddick explains. "We talked about it and we decided that the person I worked for really was the client."
Nor did Ruddick know what the post-merger conference department would look like. As it turned out, the two staffs worked together through May 1996 in order to integrate the two companies' meeting protocols, awards traditions, and other issues. One Connecticut Mutual staffer has since joined the Mass Mutual staff, and the resulting group became the new meeting department.
"When you bring two companies together, you don't just say, 'Okay, now we're a family, so you all get along.' But we use our conference as an important venue for delivering key messages to people. It's unthinkable where we'd be now if we had separate conferences. The field would be divided."
Now that Ruddick has shepherded the conference department through the first year of the merger, she's moving on to a position as head of new business communications. Jeff McEwen, who shadowed Ruddick at the Opryland meeting, will take over her conference planning role. (He had been the head of administration for the individual side of the company.)
Opposites Attract In some mergers and acquisitions, the decision to combine the companies' incentive meetings isn't so quickly made. At Jefferson-Pilot Corporation in Greensboro, NC, for example, Ed Hines, CLU, ChFC, FLMI, second vice president, conferences and incentives, is part of a task force reviewing that critical question.
Jefferson-Pilot acquired Alexander Hamilton Life Insurance Company a year ago, and rather than work to integrate meetings immediately, the two companies are keeping the status quo through 1997. Members of the task force include the senior marketing officers of the career, independent, and Alexander Hamilton distribution systems.
The two companies were about the same size before the acquisition, and targeted similar markets, but there were some significant differences. The biggest difference affecting incentive programs: Alexander Hamilton products are sold only by independent agents, while Jefferson-Pilot was built on a career agent system, with a relatively small independent agent operation.
In 1993, however, Jefferson-Pilot decided to expand the independent side, which has since grown at a tremendous rate. And even before the Alexander Hamilton deal went through, Jefferson-Pilot was questioning the wisdom of combining its independent and career agents at the same incentive convention (for agents and spouses, held every two years) and the same President's Club (for producers only, held every year). At the 1996 President's Club, Hines notes, sharing the recognition spotlight between the two groups presented some problems. "The two groups just have different needs," Hines says.
Into this situation dropped Alexander Hamilton, with its yearly offshore convention that rotates two overseas meetings with one in Hawaii-a much different profile than Jefferson-Pilot's two-year program that ventured to Europe for the first time in 1995. "The task force was formed because we realized there was a need to preserve the cultures of the different marketing groups within the organization," Hines explains.
Created in April 1996, the committee's charge was to hand a recommendation to top management about the future direction of the incentive programs for all three divisions-Alexander Hamilton's independent agent operation, Jefferson-Pilot's independent agents, and Jefferson-Pilot's career agents-no later than September 1996.
Though not officially a member of the group, Jim St. Louis, CMP, the former vice president of marketing events at Alexander Hamilton, played a critical role in the transition of these two companies by sharing the expertise he's developed over 23 years at the Farmington Hills, MI-based insurer.
"He's got a big, big job ahead of him," St. Louis says of Hines, who will be overseeing conferences for the merged company. "Alexander Hamilton has an incredible reputation and tradition for finding unique things to do."
St. Louis was on site at Alexander Hamilton's 1996 Annual Convention in Rome and at its President's Meeting in September in Boca Raton, FL-his final event with the company. In July, St. Louis and Hines did a joint site inspection at the Hyatt Regency Kauai, site of Alexander Hamilton's 1997 Annual Convention. Because each company is holding its conferences as planned through 1997, Hines is getting a crash course from St. Louis on what his attendees will expect. (St. Louis elected not to move to Greensboro and take a new job with the merged company.)
With at least one more meeting yet to take place at press time, the task force had its recommendations pretty well worked out. "There's some compromising going on here in order to keep the separate cultures, not drive anybody away, and create equality between these different groups so that one does not perceive that another has a better situation," Hines explains. "That's our challenge-to please both sides to the greatest extent possible."
As Hines points out, even if the career and independent agents didn't have different needs, to combine all three groups could create a convention of more than 1,000 attendees-too big, in his view. "If you get that large, you lose intimacy with the people you're trying to honor. There are economies of scale-bigger-name entertainment or more expensive speakers-but that doesn't offset what you are likely to lose in relationship building."
Walking or Working? In any group of insurance conference planners or marketing executives today, you're bound to find one in the midst of a merger, one at a company that is circling the waters for a nice acquisition, and one whose company is trying to be selective about who gobbles it up.
And you'll also find someone who is dealing with the fallout from two crashing cultures, two companies cutting costs, and two companies trying to move aggressively forward into an uncertain future.
For the heads of meeting departments, here's the long and short of it. When your company enters into a merger or acquisition, one of three things will happen-
A. You'll get a severance package.
B. You'll get a job in another city, at another company's home office.
C. You'll get to work harder than you've ever worked, providing critical support to the process of announcing and approving a merger-a process that is one part watching paint dry and three parts suddenly scrambling for meeting space without telling anyone else what's going on. Then you'll get to implement all the major meeting decisions that the merger monster leaves in its wake.
If you have been through a merger already, the words of Mass Mutual's Diana Ruddick will strike a familiar chord. (And if you haven't, you might want to skip this last sentence.) "We just plowed ground," Ruddick says. "I suppose if we knew what it was going to require, we'd have been a lot more intimidated."
If merging companies means merging meetings-and it usually does- everything from the tiniest registration detail to the longest-standing meeting tradition at each company has to be laid out on the table for review.
"If you're bringing together two companies, you are in all probability bringing together two separate approaches to meetings," says Dick Wright, president of The Wright Group in Richmond, VA. Wright started his consultancy after 30 years in the insurance business, and in two recent merger deals he worked to guide the companies through the process of combining their systems and cultures.
When it comes to incentive meetings, Wright says, some differences seem staggering. What if one company always goes offshore for its incentive meetings while the other's tradition keeps it from meeting outside North America? What if one company's incentive meetings are business-intensive, full of seminars and workshops, while the other offers its winners a pure vacation? Or what if one company has always outsourced the bulk of its meeting planning while the other has done everything in-house?
These seemingly irreconcilable differences can be folded into a new meeting plan, Wright insists, by using a "best practices" approach to create a transition plan. Even if a change is to be radical, getting there should be gentle, Wright advises, or the cost in discontented agents will be too high.
The first step in the mergers Wright has been involved with was to create an Incentive Task Force. The task force might include divisional heads, marketing heads, and the directors of conferences. Wright starts them off by standing at a white board and writing down a list of issues as the task force members call them out. Then the meeting moves through a review of best practices surrounding the issues.
"Take recognition," Wright explains. "Some companies give their awards the first night; some do it at a business meeting during the day; and some at the final night banquet. Who's to say what's the best time to do it? Get a discussion going."
What about the company that thinks it already does everything right? Wright laughs at the thought. "Most companies realize there are some things they can improve on. You won't have people drawing a firm line and saying, 'We do everything the best.'"
Once compromises are made on smaller items, a foundation is laid for continuing the best practices process through the more serious issues. Even an issue as seemingly cut-and-dried as whether meetings are held offshore or in the USA can be resolved with a transition plan, Wright says. The next meeting could be a cruise, for example, easing one company toward a domestic meeting or the other toward an offshore meeting.
Most important, Wright says, "Talk to the producers. The biggest issue in a merger is agent sensitivity. Keep agents as informed as you can and get their input as much as you can." He advises a meeting of top agents with senior executives at the home office as soon as possible after the merger announcement. "Let them know what your plans are, what your vision is. It's all in how you deal with people. If you're open and kind, and you explain the logic behind your decisions, they'll support you."