Executive Q&A: Stephen A. White President/CEO, Milliman


YOUTH: I was born in Oregon but came to Seattle when I was 4. My dad was the city manager of Mountlake Terrace for over 25 years. I was the numbers guy in the family. I went to O’Dea High School, then the University of Notre Dame, where I was a walk-on on the football team. I got to play a few games. I majored in math and joined Milliman right after graduation.

ACTUARIES: The actuarial profession really interests me, with its combination of business and math. What we do is put a present value on liabilities with uncertain futures. It’s like accounting with a futures bent to it. In accounting, you’re saying where things are today; the actuary tells you what a retirement plan or a life insurance policy is going to cost in the future. If a company changes the deductible in a health plan, for example, how much is that going to cost?

CAREER: When I joined Milliman in 1985, it had maybe 1,300 employees, about half of what we have today. After a couple of years working in Idaho in-house for Boise Cascade on its pensions and other actuarial needs, I returned to Seattle and got involved in management. I became a principal in 1993 and an equity partner in 1997. I worked with union funds jointly trusteed by labor and management. I also managed pension plans in which we evaluated the liabilities but also took over the administration with a call center and website for participants.

MILLIMAN: In terms of revenue, we are among the top three or four [actuarial firms] in the country. We have four business areas. We are probably second or third in the country in property-casualty, sixth in pensions, and first in life insurance and health consulting, where we work with hospitals and clinics on the best practices to deliver care. We have some of the best claims data available on cost experience for different claim types.

CULTURE: Milliman [founded by Wendell Milliman] first opened in 1947. When they added other offices in new locations, they decided to let those offices have control over their own destiny, with a separate profit structure. Even today, each practice elects its own equity partners, who share the profits of that office. One office might be quite a bit more profitable than another and the range of income for equity partners is also quite wide, but everyone is OK with that. That’s part of our culture.

TALENT: We attract people who are talented and want to have control and want to work hard and reap the benefits. That culture kind of feeds itself because the people who like the structure tend to be ambitious people who keep it going. We are very much into quality control with our work. We have a detailed peer review process in terms of who gets to be an equity partner, who has the authority to assign work. We also do a lot of collaboration on technology investments. IT and legal work are very much centralized and organized.

MARKET POTENTIAL: Our job is to help clients manage risk, and risk isn’t going away. The financial market is one area where there’s been a lot more volatility. That affects pensions and it affects life insurance in a big way since a lot of them have annuity products with minimum guarantees. Low interest rates are also a real struggle for those companies that have to provide those minimum guarantees over the long term. Our Chicago office works with many of the large insurance companies to provide hedging so that if the equity markets go down, the hedges can provide a backstop. That’s been quite successful. It really helps insurance companies take a lot of the risk out of the products they are offering.

INTERNATIONAL: This is another area that has accelerated, primarily in the insurance market. Big companies like Met Life and Munich Re are global and they are looking for expertise from a single company that can offer it across broad international markets. Right now, we have 55 offices and about half of them are outside the United States—maybe a dozen in Europe, a couple in Latin America, a couple in the Middle East and four or five in the Far East. We don’t expect to add a lot of new offices internationally, but we do expect each office to grow quite a bit. In Europe, regulators have added new, complex requirements for companies to prove their solvency. You have to do a lot of simulations: What happens in this or that situation? That has created more opportunities for actuarial firms.

COMPETITIVE ADVANTAGE: Our culture attracts more than its share of the high-level people. Another important advantage is the IT expertise we’ve developed over the past 15 to 20 years. Technology has become a big part of what we do. We have several hundred people in IT. A lot of it is based in Seattle because of the talent here. We developed a system that allows our insurance customers to do very intensive actuarial computations in the cloud. We were recognized by Microsoft as one of its technical partners of the year for that project. The group in Chicago doing the hedging work is also very IT focused. On the property-casualty side, we’re using IT to handle analytics prior to underwriting insurance. If you put in information like how old the house is, how far it is from the coast and what the zip code is it, the analytic tools can do more detailed calculations about the risks involved.

THE FUTURE: We’ve typically grown our revenues about 10 percent a year. We have a map for what we have to do differently as we become a $1 billion company in the coming years. Most of that growth will be organic. The CEO role at Milliman is not a traditional CEO role. Most of the strategy comes up from the individual practice areas. My job is to make sure we have quality people, maintain the culture and protect the brand—the reputation and the long history of quality. That’s a delicate advantage and we have to work hard to keep it.

SEATTLE: At the headquarters office in [downtown] Seattle, we have 400 to 500 people, including about 80 people who are focused on providing finance, taxes, legal, marketing and IT services for the whole firm. But we want to maintain our decentralized structure. It reduces bureaucracy and allows for more autonomy and flexibility. An expert on professional services firms brought in 20 years ago told us that while our growth was impressive, it couldn’t last with our decentralized structure and that we would have to change as we got bigger. They were wrong. We’ve still very decentralized and we’ve grown five times since then. But we do have to find ways to encourage more collaboration between offices.

Related Content

Harvey Kanter has taken Blue Nile, a struggling online jeweler, and returned it to a growth trajectory.

EDITOR’S NOTE: This is one in a monthly series of miniprofiles featuring local executives “off the clock.”

Tom Kundig is a principal and owner at Olson Kundig, the Seattle architecture firm and design practice founded on the idea that “buildings can serve as a bridge between nature, culture and people.”

Leslie Alexandre, whose leadership of the state-funded North Carolina Biotechnology Center helped strengthen that state’s life sciences sector, hopes to revitalize Washington’s biotech sector as CEO and president of Life Science Washington.