UK insurer Prudential’s objective of reducing annual costs by £195
million ($403 million) by the end of 2010 has come closer to
realisation thanks to a major new outsourcing agreement with Capita
Group. The contract calls for the UK outsourcing specialist to
deliver £60 million in annual savings by the end of 2010, adding
significantly to actions already taken by Prudential that it
anticipates will realise annual cost savings of £115 million by
year-end 2007.
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Under the terms of the agreement, Prudential will outsource a large
proportion of its UK unit’s in-force and new business policy
administration to Capita. Capita will provide customer servicing,
policy administration, new business processing, claims activity and
related technology support.
As a key element of the deal, Capita will acquire business and
assets from Prudential for a consideration of £25 million,
including part of the business of PPMS, Prudential’s offshore
operation based in Mumbai, involving the transfer of 1,250 staff.
In the UK, 1,750 Prudential staff will transfer to Capita.
The total value of the agreement with Capita, which will extend
over 15 years, is about £722 million. Of this total, £100 million
relates to an investment by Prudential, over six years, to fund a
transformation programme.
According to Prudential, the programme will deliver enhanced
customer service through a substantial simplification of policy
administration processes and migration of in-force and new business
policies from Prudential’s legacy information technology systems to
two Capita platforms.
