28th Nov 2007 08:00
Capita Group PLC28 November 2007 28 November 2007 CAPITA SELECTED BY PRUDENTIAL UK AS STRATEGIC OUTSOURCING PARTNER • £722 million, 15 year contract to deliver annual savings of £60 million to Prudential by 2010 • Capita's offshore operations more than doubled through acquisition in Mumbai The Capita Group Plc ("Capita") announces that it has today signed a contract tobecome a strategic outsourcing partner of Prudential UK ("Prudential"), toadminister 7 million mature life and pensions policies including group andindividual pensions, investment bonds and life and endowment policies. Thecontract is worth approximately £722 million over 15 years. Capita will provide customer servicing, policy administration, new businessprocessing, claims activity and related IT support to Prudential UK. Under theterms of the agreement, the detail of which is subject to a collectiveconsultation process, approximately 1,750 Prudential staff working in the UK,1000 in Craigforth and 750 in Reading, will transfer to Capita under theTransfer of Undertakings (Protection of Employment) Regulations (TUPE) in April2008. As a key element of the deal, Capita will acquire business and assets fromPrudential, for a consideration of £25 million, including part of the businessof PPMS, Prudential's offshore operation based in Mumbai, involving the transferof 1,250 staff. Although TUPE does not apply in India, all affected employeeswill transfer in the spirit of the legislation, ensuring protection of theirexisting terms and conditions. £100 million of the deal is an investment by Prudential UK, over six years, tofund a transformation programme. The programme will deliver enhanced customerservice through a substantial simplification of policy administration processesand migration of in-force and new business policies from Prudential's legacy ITsystems to two Capita platforms. Paul Pindar, Chief Executive of The Capita Group commented: "Capita is delightedto engage in this strategic alliance with Prudential UK. Our aim is to build amutually beneficial partnership to support the further growth of both Prudentialand Capita in the life and pensions industry. We look forward to working withPrudential to deliver high quality outsourced support and welcoming alltransferring staff to the Capita Group's thriving life and pensions business. "We are committed to expansion in both the UK life and pensions market and ourIndian operations to meet increasing demand. The operations and employees thatwill transfer to Capita under this agreement will allow us to take a significantstep forward with these ambitions. The Craigforth operation will be developedinto a centre of excellence for life and pensions administration. The Readingoperation will initially continue to be delivered from its current site while weinvestigate the feasibility of combining it with our operations in Cheltenham orSwindon or from an alternative site in Reading. And in Mumbai the combination ofour increased scale and capability will provide a market leading offshoring basefrom which to support our plans across the broad range of our service offerings." Nick Prettejohn, Chief Executive, Prudential UK & Europe said: "The agreementwith Capita is another significant milestone in our programme to delivercontinued superior performance and profitability in our UK business. We have setout very clear priorities for the business and this agreement helps us todeliver our strategy by removing fixed costs from our operations and achievingsignificant operating efficiencies. It will allow us to concentrate on using ourcompetitive strengths and proven capabilities to realise the attractiveopportunities in the market for retirement savings and income. "After detailed analysis of a number of potential options, it was clear thatCapita best enables us to deliver continued high levels of customer servicewhile providing ongoing certainty over costs. They are a partner with a provenrecord of high standards of service for customers and advisers, IT delivery andsupport while also offering the best overall employment solution for our staff." Capita provides core administrative support to a number of UK and overseas lifeand pensions companies, including the Children's Mutual, Lincoln FinancialGroup, Resolution, Zurich and Co-operative Financial Services. Including thisagreement, Capita Life & Pensions will be responsible for administeringapproximately 23 million policies. Capita already delivers a range of life and pension sales and administrationservices for Prudential UK's business. Prudential and Capita signed anoutsourcing agreement in 2006 under which Capita delivers end-to-end support forPrudential's UK life and pensions operations from Prudential's Belfastoperation. Capita has also been successfully providing a full range of life andpensions administration services for Prudential's international cross borderlife assurance portfolio of new and existing business since 2003. -ends- For further information: The Capita Group PlcTel: 020 7799 1525Paul Pindar, Chief ExecutiveShona Nichols, Corporate Communications Director Capita press officeCaroline MooneyTel: 0207 654 2152/0870 2400 488 (out of hours) Prudential Group press officeJon BunnTel: 020 7548 3559William Baldwin-CharlesTel: 020 7548 3719 Prudential UK press officeSteve ColtonTel: 020 7150 3136Darragh LeesonTel: 020 7150 2600 Note to editors The Capita Group Plc is the UK's leading provider of integrated professionalsupport service solutions. The Group's service capabilities encompass businessprocess outsourcing, (BPO), customer services, administration and support, humanresources, ICT, property consultancy, finance & treasury and consultancydelivered to both public sector and private organisations. With 28,500 employeesat more than 250 offices across the UK, Channel Islands, Ireland and India,Capita is quoted on the London Stock Exchange (CPI.L), and is a constituent ofthe FTSE100 with revenues for 2006 of £1,739 million. Further information on TheCapita Group Plc can be found at: www.capita.co.uk Prudential UK Prudential is a leading life and pensions provider to approximately 7 millioncustomers in the United Kingdom. Prudential UK has offices located in London,Reading, Belfast, Dublin and Stirling, and a customer service centre in Mumbai.Products: Bulk and Individual Annuities, Corporate Pensions, With-Profits andUnit-Linked Bonds, Savings and Investments, Lifetime Mortgages, Healthcare andProtection. Distribution Channels: Direct-to-customers/PruDirect (telephone,internet and mail), Financial Advisers, Business to Business (consultingactuaries and benefit advisers), and Partnerships (affinities and banks). Mature Life and Pensions ("ML&P") is the term used to describe the collection ofproducts Prudential holds for its existing life and pensions customers. Thebusiness comprises the vast majority (approximately 8 million policies) ofPrudential UK's in-force policies. It consists of group pensions, individualpensions, investment bonds and life and endowment policies (annuities, lifetimemortgages, protection and healthcare are not included within the book ofbusiness). Most of these products are still open to new business, for instancethrough top-ups, but the main role of the ML&P operation is to look after thisexisting business and get the best possible value from it for shareholders andpolicyholders. Prudential expects that this business will continue to be asignificant source of new business, particularly through internal vestings andin the corporate pensions arena. The Mature Life and Pensions back-book represents around two-thirds ofPrudential UK's total cost base. A key priority for Prudential is to continue todeliver embedded value through the ML&P business and as the back-book runs downover the course of the next few years (over 40 per cent of the in-force policiesmature in the next five years), this creates an inherent pressure on unit costs.As large proportions of the costs are currently fixed, this means that unitcosts would continue to rise beyond the levels allowed for when the policieswere originally sold. Prudential, therefore, highlighted an aggressive target toreduce per-policy unit processing costs in line with the reducing numbers ofin-force policies. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CapitaPrudential