1301 5th Avenue, Suite 3800
A consulting firm is defined, in large part, by the quality, experience and skills of its professionals. Over time, Milliman has earned a solid reputation for its independence, excellent work product, practical advice, and dedicated client focus. Our structure, which is entrepreneurial, attracts independent men and women who seek out challenges and are willing to take risks. Clients recognize that dealing with business owners translates directly into hands-on, client-driven service and lends itself to forming long-lasting relationships characterized by strong client communications and a "business advisor" approach to problems and opportunities.
Milliman USA is one of the largest independent consulting and actuarial firms in the United States. The company works with corporations, government entities, union organizations, and financial institutions in the areas of healthcare; property and casualty insurance; pension, employee benefits, and compensation; and life insurance and financial services. Owned by more than 200 principals, Milliman has offices in more than 29 locations in the United States, Bermuda, Brazil, Hong Kong, Japan, Korea, Mexico, and the United Kingdom. Milliman is a founding member of Milliman Global.
1947-70s: New Company Gains Ground in a New Industry
In 1947, Wendell Milliman, a specialist in life and health insurance, returned home from New York and rented a two-room office in Seattle. The actuarial profession was just beginning to develop broadly in the United States at the time, and Milliman had in mind creating a national actuarial firm--a company whose business it was to evaluate risk for its clients, primarily insurance companies and pension plans. As an actuarial company, Milliman's business would use statistical evidence to answer questions about the future, such as: How long is someone likely to live after retirement? How much money would a start-up company need today to create a pension fund for its employees in 20 years? What is a woman's average stay in the hospital after childbirth? What are executives in the Northwest paid and how much more might they expect to earn the following year?
Three years later, Milliman hired Stuart Robertson, a young actuary from Northwestern Life Insurance Company of Seattle. Robertson chose to join Milliman--turning down a second offer to become chief actuary at a mid-sized New York-based life insurer--even though, as he explained in a 1998 Puget Sound Business Journal article, "The job in the East carried a salary exactly double that which Milliman could afford." Nonetheless, he and Milliman shared a vision, and together the two formed Milliman & Robertson.
Although Milliman and Robertson began small (they at first shared a single office, desk, and telephone), the two men's vision was larger than their workspace. Unlike other firms, theirs was organized from the bottom up around four principal consulting practices--health, life insurance, property and casualty insurance, and pensions and employee benefits--each of which enjoyed a great deal of autonomy. Priding themselves on "quality work, good client relationships and a solid reputation," according to Robert Collett, who was president and chief executive of the company from 1990 to 2002, they set about steadily to grow. Throughout the 1950s, M & R, as the company came to be called, expanded down the West Coast, and in the 1960s, it spread coast to coast.
1970s-80s: Becoming a National Presence
Beginning in the mid-1970s, when the government mandated that pension plans meet stringent regulations, and when insurance companies began to spin off their actuarial services to outside companies, M & R's client list grew rapidly. By 1983, when James A. Curtis replaced Robertson as president and chief executive of the company, M & R had become the nation's sixth largest actuarial firm and specialized in the field of employee benefits. Curtis, who had studied actuarial science at Drake University, had joined the company at age 19, when he turned down a job playing the bass with the Tommy Dorsey Band. As Curtis later explained in a 1983 article in the New York Times, as head of M & R, he saw his biggest challenge as seeing to it that the company continued to grow, yet maintained "that small company feeling."
Curtis served as president only until 1990, when Robert L. Collett replaced him. That same year, the company headed up the creation of Woodrow Milliman, an affiliation of 11 actuarial and consulting firms operating in North America, Europe, and the Pacific Rim. Two years later, Collett also assumed the role of chief executive of M & R. By this time, the company was organized officially as a sort of franchise operation with "equity principals" who worked in separate, functionally independent offices that specialized in different parts of the company's overall practice. The individual offices paid a fee to the centralized structure, but functioned as independent profit centers.
The 1990s: Growth and Expansion into Healthcare
Throughout the 1990s, M & R also continued its involvement in the area of employee benefits. In 1991, it purchased Fleet/Norstar Employee Benefit Services Inc. In the late 1990s, the Pennsylvania Insurance Department hired M & R to estimate the potential financial savings from the state's new workers' compensation law. And in 1997, in a move that the California State Employees Association opposed, M & R performed a feasibility study to determine whether the state of California ought to privatize the State Compensation Insurance Fund, and, if so, how.
By the late 1990s, insurance companies had become increasingly dependent upon actuarial outsourcing firms, which, as a result, were growing at double-digit rates. M & R expanded from its traditional line of business, the design and administration of employee benefits, to help companies develop managed healthcare plans.
Healthcare financing had undergone a fundamental shift in the mid-1980s as the federal government started paying hospitals flat rates for different treatments through Medicare programs. Healthcare executives, as a result, sought ways to make their practice more consistent. M & R's consultants, who had already been helping HMOs and hospitals measure their performance against that of the industry, began to formalize the company's "notebooks" filled with recommended "best practices" (for different conditions that achieved the desired results most consistently) into official guidelines.
In 1990, the healthcare segment of M & R began to sell its guidelines. Based on data the company collected from medical articles, hospital records, and doctors, the guidelines served as a means of advising medical institutions on appropriate lengths of hospital stays and assisting insurance companies to determine whether to pay for treatments. Throughout the 1990s, M & R published nine updated versions of the guidelines, which it sold for an average of $500-$900 per book.
In 1993, as healthcare reform moved to the top of the nation's agenda, M & R also introduced a service for consumers, offering them access to healthcare cost data. Any individual could consult M & R's database of more than 150 million claims for the cost of a 900 telephone call.
M & R was by now one of the most influential firms with insurers and HMOs and one of the key players in the national move to curb medical practices and to slow the growth of medical costs. Annual sales of its guidelines topped 6,000 copies--not including electronic copies--up from about 600 in 1990. As the 1990s wore on, M & R's sway became ever more significant, and it became embroiled in the healthcare debates sweeping the nation.
Although the chief author of the guidelines insisted that "quality of care and efficiency of care" were convergent, in a 1995 New York Times article, the A.M.A. fought the use of the guidelines on the grounds that they were being used to help insurance companies cut medical costs at the risk of endangering patients. Doctors insisted that they needed to place more emphasis on saving patients' lives than on saving money. M & R responded that the guidelines should never be used to deny treatment, but only as reference points for discussion. Its recommendations were for uncomplicated cases only and, in these cases, represented the "best practice" in medicine. By 1995, the company had issued four volumes of guidelines--for hospital admission and stays, doctor's office treatments, home healthcare, and recovery times before returning to work.
By 2000, the guidelines covered everything from major surgeries to prescription drugs and were a lucrative part of M & R's business. M & R then served more than 50 million people in the United States; by 2001, that number was at 100 million. Then, in 2000, the disagreements between the medical profession and M & R concerning appropriate pediatric medical practice exploded. Drs. Thomas Cleary and William Riley brought suit against M & R for listing them as contributing authors on its pediatric guidelines. (Two unrelated class action suits filed against insurers in New York and Florida also blamed those insurers for relying two heavily upon the guidelines.) The doctors contended that the guidelines had no basis in sound medical practice--implying that M & R had bought scientific legitimacy by paying the pediatrics department at University of Texas-Houston for the school's stamp of approval--and asserting that in following the guidelines, a doctor might jeopardize a patient's health. M & R insisted that the guidelines were evidence-based, but, doctors insisted, only 15 percent of M & R's guidelines came from articles describing organized studies, which much of the medical profession considered the best evidence. M & R insisted that studies tended to be out of date by the time M & R published its volumes.
M & R sent letters to those who purchased the guidelines saying that Riley, Cleary, and two other University of Texas doctors wanted their names removed from the list of contributors and stressing that neither the university nor the remaining contributing authors "stood by the book." It issued a CD-ROM version of the guidelines with changes.
2000 and On: Restructuring and Going International
While the debate raged over its healthcare guidelines, M & R took on the broader role of advisor on mergers and acquisitions, demutualizations, new product development and asset management, and financial analysis in the late 1990s. In 1997, for example, it performed an analysis of the financial stability of Lloyd's of London and helped its client restructure its organization. On the property/casualty side, M & R helped develop homebuilder warranties, auto warranties, and credit card warranties. By 1998, the company, which had grown throughout the 1990s at double digit rates, employed 1,200 people in 28 offices in the United States, Bermuda, and Japan and had revenues of $230 million.
Woodrow Milliman, by the late 1990s, had grown to represent 31 companies in more than 100 cities. By 2000, it brought in revenues of $390 million. Believing the time was right to strengthen its position in China, the management of Woodrow Milliman established new employee benefit consulting practices in Hong Kong and Shanghai owned jointly by its member firms. M & R began engaging in work overseas, too, assisting several countries in central and eastern Europe to assess the demographic, economic, and financial implications of welfare reform. It formed a Denver-based practice to focus on international as well as local clients with insurance and financial interests in Latin America.
M & R also undertook major restructuring moves in 2001. Having become increasingly involved in international and cross-border mergers, M & R renamed itself Milliman USA and opened Milliman UK Ltd., Milliman Asia, Milliman Japan, and Milliman Australia to focus on financial services. At the same time, Woodrow Milliman metamorphosed into Milliman Global, an international group of 22 actuarial and consulting firms focused on serving the international insurance, employee benefits, and healthcare industries.
The company also engaged in a series of acquisitions between the years 2001 and 2003 as a means of planning for its long-term growth. In 2001, it bought Dorn, Helliesen & Cottle, an investment consulting firm specializing in advising institutional sponsors of investment funds. In 2003, it signed a long-term co-marketing and technology sharing agreement with SS&C Technologies Inc., provider of investment and financial management software, to distribute, develop, and service software. It also purchased the Insurance Actuarial Software practice from IBM Business Consulting Services, whose products were marketed under the Triton Systems name, and Focus Solutions, an insurance software technology company. IAS brought with it a suite of valuation software products, now known as MG-Triton, and ReservePro and Affinity, leading loss reserving software for property and casualty industry. The merger of Focus Solutions and Milliman's FAST life administration system led to STEP Solutions, which provided for the automation of all insurance business processes.
After Patrick Grannan took over as president and chief executive officer in 2002, Milliman also acquired the consulting business of Evaluation Associates, into which it folded the company's existing consulting practice in 2003. It added Am-Re Consultants that same year and strengthened its presence in Europe--especially Italy and Spain--with the acquisition of Morgan Consulting, a prominent actuarial and management consulting firm.
In 2003, Milliman's consultants collaborated with the member firms of Milliman Global on international projects--such as cross-border mergers, the restructuring of Lloyd's of London, the reshaping of the Japanese life insurance market, and the first insurance actuarial assignment in China. In 2004, Milliman USA introduced BenPulse, a web-based employee benefit evaluation tool that allowed client companies to compare their benefit programs with that of other companies in their region and industry. Its Employee Benefits Research Group, consisting of a team of actuaries, lawyers, and research and communications experts, monitored legislative and regulatory activities taking place in Washington, D.C. In other arenas, the company took final steps toward the release of MG-Hedge, trademarked software allowing clients to evaluate hedging strategies. It developed a single suite of life products to cover the entire spectrum of client needs.
In 2003, Milliman USA released its guidelines in handheld/PDA format. In 2004, the guidelines were in use by more than 100 insurers in the United States and by several insurers in Chile. The company--which now called itself just Milliman--issued a new, expanded General Recovery Guidelines that covered hospital admissions with a web-based transaction version that allowed for interactive access. Milliman also completed guidelines for use in the United Kingdom and in Latin American and Asian countries.
Principal Subsidiaries: Evaluation Associates, LLC, a Milliman Company.
Principal Competitors: Hewitt Associates; Marsh & McLennan; Towers Perrin; Mercer Human Resource Consulting; Watson Wyatt Worldwide.