CL: We are a very focused, specialized insurance and fee income company targeted toward very selected industries. Historically, like most companies in the insurance space, we started out doing insurance underwriting against specialty programs sold through banks, retailers and other financial institutions. What we did well, historically, was market specialty products through third-party distribution. We like mass distribution, it gives us a nice spread of risk — all the things you like in insurance. We really built the core of the company on that. Where we've gone during the past three to five years is to take that core capability of these specialized programs sold through third-party distribution and really ask the question, how can we build on that, not just as an insurance underwriting company, but what other products, services and adjacencies should we build around these core products?

We refer to this as our value chain. That's what we're excited about now. As we look at the future and this notion of the value chain, I think this whole process called Targeted Solutions is a great example of how we think about this.

For many years, we dominated the core credit card insurance and debt deferment product line with the major credit card companies. We've been doing that well for many years, doing great upfront marketing, very good retention at the backend, and customer service: all core stuff. Yet, as a company, it occurred to us that there's got to be a next generation of how we're thinking about this business model. This will give you an idea of how we reinvent ourselves culturally every few years. I think it is one of our real competitive advantages. We'd been doing upfront outbound telemarketing and retention and customer service for many years. This part of our industry had not changed much in a very long time. So what we did was invent a way to change the paradox from top to bottom. We looked at how we were measuring the metrics and whether we were looking at the right things. As it turns out, we weren't. There was 20 years of legacy thinking. So we changed that and said, “Wait a minute…how can we build in a capability around that new metric that helps us do better than everybody else in the industry?” It took a year and a half or more, and the output was very simple.

We can now go to a client and say, if you want to do better on the front end, (more cost-effective acquisition) and better on the back-end (more cost effective in retention of revenue), than we can help you. It's been a very powerful proposition. What I like about it is that we took a core competency we already had and morphed it and reinvented it. As an organization, we tend to find these niche products serve lots of different industries, mostly financial distribution. The other thing that's changed for us in the last five years is we've taken these core business models and are transferring them to markets all over the world. We're now fully operational in 10 countries and will continue to add countries in the future.

NT: You have a lot of things in your favor. You're a major player, part of a Fortune 500 company. Also, you actually have background in this industry. You had an idea of what the industry was about before your launched your product.

CL: Yes, one of the things we're excited about is that when we invent something like Targeted Solutions, one of the reasons why we're able to invest to begin with and [recruit good people] is the fact that we can leverage this in the markets that we're in around the world. So while our competitors tend to look at things on a domestic basis only, I think it's a tremendous advantage that we can spend dollars here to invent and implement something, knowing we're going to be able to leverage it in a dozen or more markets. This is clearly a capability that we believe can leapfrog us into the markets we're in. If you look at most of the markets outside of the U.S., even basic retention in customer service work is done at a very rudimentary level, if at all. So think about the power of going into a market such as Brazil, where we're growing tremendously, to take this type of proprietary process knowledge and technology into a market like that at the appropriate time, I think puts us in a position competitively in a marketplace that's barely doing customer service and retention correctly. We put this in, and I can see our competitors having a really difficult time competing with that, and that's exciting.

NT: Can you tell me about the challenges that are facing your company and your market?

CL: My overarching challenge for Assurant Solutions is probably not dissimilar to most companies, and that's growth. If you look at [the financial results of our parent company], you'll find we're a very profitable company. Today, everybody in the public company environment is looking for revenue growth. We're doing very nicely in that category. But I tend to be somewhat impatient that we have to have continued plans to keep growing our revenue. That's not an uncommon challenge, but probably our biggest one.

Targeted Solutions is [an example of] the kind of things that we are doing in all of our businesses now. We take a business model that's tired and ask how we can turn that back into a revenue-generating business model. At the end of the day, that's what Targeted Solutions is. It's complicated. It has a lot of moving parts. But it's about generating more revenue for us and for our clients. That's what gets us excited about it. How we attack this challenge is to look at the value chain that we're providing, and ask if we're doing things, investing in things, that will drive more revenue. We go after those things pretty aggressively. Every company has a unique culture, none are right or wrong, but our uniqueness is that we try to balance a very aggressive sales, marketing, promotion and innovation culture, and I think we do a very good job of that. Our core values are of great concern to us. We care about how we do business, and not just what we do. I think that's a little bit unique about what's helping us drive growth.

NT: In your opinion, what is the greatest need of our industry?

CL: We looked at [the call center space] and perceived that it was a somewhat tired business model. Us included…we'd been in this business for 25 years, doing call center work. We thought it needed to be reinvented. When you get your head focused on one thing for so many years, it's so hard to see in the periphery around that. We decided we'd been measuring the wrong stuff and thinking about it in the wrong way for a long time. We thought the industry needed a shot in the arm, and that's what we did we in Targeted Solutions.

NT: Sometimes you just need some new blood to generate new ideas.

CL: I think you're spot on. We're a big believer in terms of the promotional aspect. I think if there's anything all of us can learn from the dot com crash a few years back is the fact that there were so many brilliant ideas accompanied by the complete inability to execute them. Most of those companies failed. They had very viable business models, but they were just that. They completely lost sight of the fact that this is about promoting that capability and really educating people, or educating the whole industry, on a new capability. You can't do that in a laboratory. We've got a lot of people working in labs and making the magic boxes work every day, but if no one knows about that, who cares? It's a great intellectual exercise, but it's not going to drive back to my biggest challenge, driving revenue growth. I think one of the unique combinations we have is that we're innovative and come up with ideas, along side our history — the 60 plus years of our predecessor companies. Our legacy is very much founded on sales, marketing, promotion and a voracious appetite to bring in business in new areas. This is a great example of that. We have the better mousetrap, so now we have to go out and make sure we educate the industries and get that promoted.

NT: What do you feel is the impact of this new solution on your bottom line?

CL: From the Assurant Solutions standpoint, it's certainly material. In our initial phases of both the front-end and back-end application, and whether it's retention or sales, we've seen exponential lift in baseline results for our clients. In some cases, the volumes are so significant that this is a material impact for us. As a company, before we invest in something like this, we go through a pretty analytical process of understanding the potential: what we call the "what do we get if we win?" scenario. We don't like to invent things just because it's interesting; it has to have a material impact on the company.

NT: You mentioned that you could tailor-make the product to individual company needs. Is it that flexible?

MB: Basically, what this capability looks for is opportunities as they relate to either saving a customer or potentially acquiring a customer. What we do is look at a client's file, and we look at the value distribution of the customers they are either trying to acquire, or customers that are calling in who could potentially be canceling. We build models around those individuals with the ultimate goal of predicting what the potential value of a save attempt would be to that customer. Then, whether we're doing the call center work ourselves or the client is using another provider, we look at the performance of the associates who are assigned to whatever the task happens to be: acquiring, saving or cross-selling, and develop a customized model for them to measure their performance relative to the effort, and how that performance lines up against the customers who are either being acquired or calling in. So it's not just one-dimensional where it's "this person is better than that person," but multidimensional, in that we're looking specifically at how an associate performs with a specific type of customer. That gets added up to create an optimization model, which gets the right customer to the right associate to optimize the result of the entire team. It's from that where we get the huge revenue lifts.

NT: What would you say is your company's greatest core competency?

CL: A couple of things. The overarching one goes back to the culture that I described. I think we have the unique ability to take innovative ideas and implement them. We have a very passionate, driven group of people … people who care about our core values and how we do things. When you think about the industries we serve: banks, retailers, wireless providers, mortgage companies — these are very reputation-driven companies. Our industry has been plagued by companies that come and go. Some by choice, some because of financial problems. Our core is the way we behave as well as the passion we have for instituting our business plans. This is very important and has led to a lot of our success over time. I tend to think about core competency and differentiators together. What I think sets up apart is this notion of a value chain, and that we never think about just a product. Targeted Solutions came from our credit card insurance business, where we sell an ancillary life, disability and unemployment product attached to a credit card bill. You might ask, how in the world did you get into what you're doing now based on that?

I think that is the essence of our differentiator. If you think about a picture of a core product; in this case, credit insurance on a credit card, and around that what we try to do is create this value chain to say, OK, what are the other parts that are going to make this program successful? Then, we define what success is. For us, success means we're going to create value for our customers and, in most cases, that means more revenue, because these are revenue-generating programs, and we're going to make customers happier. If we can do any of those things for our clients and our industry, we're going to win. It's not just delivering a simple product, it's doing things like Targeted Solutions. It's a differentiator, because none or our competitors know how to do that. It's about point-of-sale marketing. We've developed techniques at the point of sale where you might walk into CompUSA, and the likelihood of you walking out with a warranty (another Assurant Solutions business) is much higher because of our proprietary techniques for how to sell those [product]. That's where we spend our time: thinking around the product. They are pieces of the value chain that we're going to invest in and get better and better at, and invent new ones all the time. This allows us to drive that revenue, make our client customers happier. We think we win in the long-term.

NT: Yes. If you create value for your customers and help them with the retention of their customers, they will stay with you forever.

CL: I think that's where we are now. We've really proven the patented processes in a very finite space: we've focused on the credit card space. What we're pushing at now is where else this application will work as we look at the whole [call center] universe. That's what gets us excited. We think the answer is, a bunch of places. We have to go about figuring that out, and promoting it within those new spaces.

NT: What would be your company's positioning statement?

CL: Certainly, at the high level of our solution, we position ourselves as a very targeted, specialized, insurance, fee-income solution for our clients. There are a couple of important points to this. We want to partner with industry leaders only. Over the years, that has really driven the success of our market. No. 2, if we can help minimize risk, either real or perceived risk, then we tend to win over the long term for our customers. Three, the enhanced revenue; and four is what we call achieving operational excellence. It's really a nice way to say, we want to offload all of the processes that are not core to you. For example, I can go to a credit card company and offload and manage from top to bottom your credit card insurance program — front-end acquisition, processing, benefit claims payments, targeted retention, etc. We want to do the whole thing for you. That's how we achieve the operational excellence. That's how we try to position ourselves. We do that at the solutions level within a bunch of different industries and product lines, but that positioning doesn't change. Manny, can you address that question as well?

MB: How this whole thing fits with regard to Targeted Solutions is that we're here to create incremental revenue for our clients. For example, within a 12-month Targeted Solutions campaign, a client achieved 67 percent lift over baseline in revenue retained that translates to a projected $25 million lift in revenue over a 24-month period. We've even structured arrangements so that we get paid as that occurs, so there's no risk to our clients. These capabilities will create significant incremental revenue for clients who decide to deploy them.

NT: I was very impressed when I saw the solution. It's essentially a pay-for-performance offering.

MB: Absolutely.

NT: I think that's very unique. You have a great product. Thank you very much for your time.