Acquisitive insurance group Resolution said its Friends Life Group subsidiary has entered into a 'transformational' outsourcing arrangement with Diligenta, an insurance services specialist that is part of Indian information technology (IT) contractor Tata Consultancy Services.
The new 15-year contract will see around 1,900 Friends Life employees transferred to Diligenta with the policy administration and IT services for With-profits, Annuity, Legacy protection and UK Wealth business lines being outsourced.
The outsourcing arrangement is expected to generate annual cost savings of £60m, some £31m higher than previously announced IT and Customer Service integration synergies.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The outsourcing arrangement is expected to benefit the MCEV (Market Consistent Embedded Value) operating profit by around £200m in 2011, the company said.
The company said that its Friends Life division will create an in-house management operation in the second half of next year that is expected to support the UK business units, particularly Retirement Income and will look to recruit and add to the current 30-strong in-house team of investment professionals. The estimated one-off costs associated with the set-up of this capability are £5m with ongoing running costs of £4m per annum.
In an update on trading so far in 2011, total sales (measured on an annual premium equivalent [APE] basis) for the nine months to 30 September 2010 were up 25% to £879.6m compared with £705.1m for the same period in 2010.
For the third quarter alone, sales rose 13% to £278.7m from £247.1m in the third quarter of last year.
Group available shareholder cash held in Resolution and Friends Life holding companies totalled £610m at 30 September 2011, down from £793m at the end of June, reflecting interest and financing costs and the share buy-back in the period.
As is becoming increasingly common these days with financial companies, the group outlined its exposure on what it calls the higher risk European economies - Portugal, Ireland, Italy, Greece and Spain - saying it is 'minimal', with exposure limited to £7m in respect of Italy.
--
jh
-
Donald Trump doubles steel and aluminium tariffs – what does it mean for markets?Donald Trump’s steel and aluminium tariffs will be doubled to 50% from Wednesday. Will the UK be impacted following its trade deal agreement, and what does it mean for markets?
-
Parents forced to borrow as much as £22k to cover private school feesThe introduction of VAT on private school fees at the start of this year has resulted in more parents borrowing to pay for their children’s education
