22nd Jun 2005 08:30
Innovation Group PLC22 June 2005 22 June 2005 RNS REACH THE INNOVATION GROUP PLC The Innovation Group ("TiG" or "the Group"), which specialises in providingtransformational business solutions for the global insurance community thatincorporate technology, outsourcing and supply chain management, today announcesthat it has successfully signed a new US client, as anticipated at the time ofthe Interim Results on 4 May 2005. The contract for TiG's claim solution comprises initial licence and servicesfollowed by licence usage fees. The total value of the deal to be recognised inthe current financial year is expected to be in the region of £0.5m to £1.0m.The majority of the contract will be recognised in future years. Critical to the selection process were the depth of functionality - particularlyin subrogation and financial analytics; the quality and knowledge of TheInnovation Group's people; and the ease of use in supporting the customer'schanging business processes. The agreement continues to show the depth of TiG technology and is viewed as ahighly positive development for operations in the US market. Enquiries: The Innovation Group plc 01489 898300Hassan Sadiq, Chief Executive Officer Paul Smolinski, Group Finance Director Smithfield 020 7360 4900Sara Musgrave/Sarah Richardson Notes to Editors The Innovation Group plc is a specialist provider of transformational businesssolutions for the global insurance community that incorporate technology,outsourcing and supply chain management. Its solutions enable clients toimplement changes that increase profits and improve their ability to servecustomers. The Group's services are delivered through local operations in thetop four world's insurance markets and leverage a strong talent and effectivecost base through operations in South Africa and the Asian subcontinent. Improvements in capital markets and the recognised need to dramatically improveprofitability of operations have increased interest across all segments.Industry analysts and market leaders recognise the significance that improvingefficiencies and lowering direct expenses have in positioning organisations tocompete in a shrinking global market. A recent Conning Strategic Study on insurance expense ratios cites that expensesavings of 10% could result in a 25% improvement in Return on Equity. Otherstudies by Gartner, Meta Group and Datamonitor cite addressing core processingfunctions, such as Policy and Claims processing, and outsourcing as criticalpaths to achieving direct savings and profitability improvement. Across the markets where the Group maintains clients and operations, itsofferings have proven their value in reducing costs and improving the customerexperience for our long term Tier One, Two and Three clients. These marketsrepresent more than $960 billion in Gross Written Premium and more than $650billion in claims expense that can be directly addressed with the Group'ssolution offerings. Examples of these long-term relationships include: ACSC,Allianz, Aviva, AXA, BMW, Continentale, Direct Line, Elders, Ford Motor Company,Jaguar, JVC, Norwich Union, RAC plc, RSA, Sanyo, Toshiba, Toyota, Sonpo24,Zenith and Zurich. Market Facts: Geographic 1. United States ($574,579); 2. Japan ($97,530); 3. GermanyRevenues ($94,073); 4. United Kingdom ($91,891); 5. France ($58,244); 7. Canada ($36,303); 11. Australia ($8,360); 28. South Africa ($3,000) (McKinsey, 2003 figures)(USD,Millions) Key In the past 20 years, the banking industry has achieved an 80%Ratios improvement in its efficiency ratio, and improved its overall return on assets by 60% and overall return on equity by 25%. (Conning Research, 2004) Based on historical costs for the insurance industry, expense reductions could greatly exceed 10%, a figure that could yield a 25% improvement in the average ROE. (Conning Research, 2004) Market The effect of cyclical pricing trends have had temporary effects onIssues expense ratios, but these effects appear to revert to a constant, or slightly increasing, long-term trend. (Conning Research, 2004) Claims administration and payments cost insurers, on average, 80% of their annual revenue. (Gartner, 2004) Trends More than 70% of insurers will re-examine their existing administration systems during 2004/05, and more than 35% will extend, rebuild, or replace at least some of them by 2005. (Meta Group, 2004) 20% of insurers will seriously consider business process outsourcing as a viable alternative. (Meta Group, 2004) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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