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Merger of Liazon parent no deterrent to growth goals

The proposed $18 billion merger between Willis Group and Towers Watson won’t affect Liazon, the Buffalo-based operator of private health insurance exchanges that was purchased by Towers Watson in 2013, Liazon’s CEO said Thursday.

While the companies say they will find up to $125 million in annual savings following the merger, Liazon isn’t a target of layoffs and should continue its recent growth spurt under the combined company, Ashok Subramanian said in an interview.

Liazon boosted its employment by 70 percent over the last 12 months and says it is on pace to meet its commitment of hiring 500 people in its Buffalo offices over five years as part of its participation in the Start-Up NY tax-incentive program.

“The message to our team and the message to all of Liazon, and all the exchange business in general, is business as usual,” Subramanian said.

Liazon was founded by Subramanian and fellow Buffalo-area natives Tim Godzich and Alan Cohen in 2007.

The founders had come up with an innovative model for an online benefits marketplace, targeted to employers, that foreshadowed the public health insurance exchanges established under the Affordable Care Act. The company started out with a focus on serving small clients but now primarily sets up and manages exchanges for midsize and larger companies.

Towers Watson bought the company for $215 million in November 2013, but the new owners had to be convinced to let Liazon expand in Buffalo instead of in one of the parent company’s existing locations.

Liazon moved into the Fairmont Creamery building on Scott Street last summer, and the company has been on a major growth track since then. Liazon initially planned to take one floor, the eighth floor, but now will take up the sixth and seventh floors as well, Subramanian said.

As of July 1, 2014, Liazon had 148 employees, but the company added 104 more over the last year. About three-fourths of the 252 Liazon workers are in Buffalo, with the rest based out of the company’s New York City offices or telecommuting from other locations.

In the second half of last year, the company joined the Start-Up NY program, which eliminates most state taxes for companies and their employees for those firms accepted to set up shop in specific zones tied to a university campus. But because only new hires are eligible, and they must work for six months to count toward a company’s Start-Up NY commitment, Liazon finished 2014 with zero Start-Up NY hires, Michelle Plesh, Liazon’s vice president of people operations, said at a June 17 promotional event for the program.

The company has hired 76 people toward the goal of 500 new employees, and Plesh said Liazon is seeking to hire about 50 more, including 25 software engineers, by the end of the year.

The planned merger won’t upend those plans, Subramanian said two days after the consulting and insurance giants announced their intentions.

The all-stock merger is subject to various approvals and is scheduled to be completed by the end of the year. The combined company would be known as Willis Towers Watson and have 39,000 employees and annual revenues of $8.2 billion.

Liazon already has a relationship with Willis, for which it built a private label platform, Willis Advantage, several years ago, Subramanian said.

The merger combines Towers Watson’s private OneExchange system, which serves large companies, and the Willis Advantage platform that serves middle-market clients, boosting the reach of both, an industry expert said.

“They can serve clients across the spectrum and have invested quite a bit in the technology to do so,” Paul Fronstin, director of the Employee Benefit Research Institute’s Health Research and Education Program, told Employee Benefit News.

Subramanian said it’s second nature for people in his hometown to worry whenever a large company with local operations announces a cost-cutting move. But he said too much progress is taking place in Buffalo for people here to have a “crisis of confidence” or to anxiously wait for bad news to come.

“People’s minds first go to, ‘Oh, my gosh, you know Buffalo’s going to get hosed again.’ We’ve got to get past that. It’s a new day. It’s a new time,” he said.

Subramanian is particularly optimistic about the prospects for growth in the health care software sector occupied by Liazon. He cited the Supreme Court’s recent King v. Burwell decision validating the subsidies provided to marketplace enrollees, saying the ruling bolsters the network of public insurance exchanges and helps private operators, too.

“The private and public exchanges are not competitive with each other in any way. They’re highly complementary,” Subramanian said. “The more people who use the public exchange, who like the public exchange experience, will cause more companies to look at a private exchange as an approprivate option for them. And vice versa. They’re very symbiotic, if you will.”