Aegon today announces that its US subsidiary, Transamerica, has entered into an agreement with Tata Consultancy Services (TCS) to administer the company’s US insurance and annuity business lines.
The partnership enables Transamerica to accelerate the enhancement of its digital capabilities and the modernization of its platforms to service its customers in all lines of business. The agreement, a multi-year partnership with more than USD 2 billion of revenues to TCS, is expected to be completed by the second quarter 2018.
This agreement is expected to lead to annual run-rate expense savings for Aegon of approximately USD 70 million initially, growing to USD 100 million over time. The majority of these expense savings is expected to benefit underlying earnings. Total transition and conversion charges are estimated to amount to approximately USD 280 million, and these amounts will be recorded in non-underlying earnings. The majority of these charges are expected to be recorded over the first three years of the agreement, with approximately USD 100 million of transition and conversion charges reflected in the first half of 2018.
TCS will administer Transamerica's life insurance, annuity, supplemental health insurance and workplace voluntary benefits products and take on administration of over 10 million policies. In addition, Transamerica is considering entering into a similar servicing and administration arrangement for its long term care customers. Any forthcoming decision would be announced separately. Transamerica will continue administration and servicing of its retirement plans, IRAs, Advice Center, mutual funds, exchange-traded funds and stable value solutions on existing platforms.
This decision supports execution of Transamerica's customer centric strategy and focus on sustainable growth. "We continue to put our customers at the forefront of everything we do. I'm very excited to embark on this partnership with TCS, whose transformation and technology innovation capabilities will supplement our focus on improving our customers' experience in a digitally enabled way. This supports meaningful growth in all business lines – including insurance and annuities – and advances our competitive positioning. TCS was carefully selected because of its significant, ongoing investments in technology and its expertise in the insurance and annuity industry," said Mark Mullin, member of Aegon's Management Board and CEO of Transamerica. "TCS' core competencies complement ours. TCS will provide valuable administration and quality customer service, and Transamerica will continue to engage with our customers, clients, and advisors in ways that are most meaningful to them by utilizing our digital engagement platforms and by developing new solutions that help people save, protect, invest and retire."
All of the Transamerica employees currently supporting these business lines and whose roles are in scope will be offered positions by TCS, helping to ensure a consistently excellent experience for Transamerica customers. The transition will affect approximately 2,200 current Transamerica employees. Transferring employees will be given the opportunity to remain in the same US cities where they are currently based.
Founded in 1968, TCS is a leading global IT services, digital, consulting, operations, and business solutions company that has operated in the US for more than 40 years. It offers deep expertise in the insurance sector and works with more than 100 insurers today, including six of the world's top 10 insurance companies. TCS will expand its existing relationship with Transamerica under this transaction, and will locate in Transamerica's current offices in various US cities. The agreement between Transamerica and TCS represents a notable expansion of TCS' insurance business in the US, and the company plans to establish its new North American insurance hub for business operations in Cedar Rapids, Iowa, as part of its plan to make a significant investment in the region.
"TCS continuously invests in the latest technologies, local talent and US facilities to help leading US companies adapt to rapidly evolving customer demands. This agreement marks TCS' entry into a highly specialized US Insurance Third Party Administration marketplace and will establish TCS BaNCS as a formidable digital platform for the US Insurance industry, following its stellar global track record over the past decade," said Suresh Muthuswami, President and Global Head, Banking, Financial Services and Insurance Platforms, at TCS. "TCS has partnered with its global insurance clients in their transformation journeys and played an integral role in their growth. We have enabled improved speed-to-market, customer engagement and cognitive operations through our innovative technology services, the TCS BaNCS agile and digital platform, and our unmatched industry expertise. TCS is proud to partner with Transamerica in its ongoing transformation to enhance its customer experience, and looks forward to welcoming their current employees for new careers at TCS."
TCS has invested nearly USD 3 billion in the US over the past three years and is among the top two job creators in IT services in the US. It is also one of America's 50 most community-minded organizations, engaging nearly two million Americans through its extensive nationwide STEM education programs, academic partnerships and endowments to schools such as Carnegie Mellon University, Cornell Tech and Massachusetts Institute of Technology.
About Tata Consultancy Services (TCS)
Tata Consultancy Services is an IT services, digital, consulting, operations and business solutions organization that delivers real results to global business. TCS offers a consulting-led, integrated portfolio of IT, BPS, infrastructure, engineering and assurance services. This is delivered through its unique Global Network Delivery Model™ (GNDM), recognized as the benchmark of excellence in software development. A part of the Tata group, India's largest industrial conglomerate, TCS has over 389,000 of the world's best-trained consultants in 46 countries. The company generated consolidated revenues of US $17.58 billion for year ended March 31, 2017 and is listed on the BSE (formerly Bombay Stock Exchange) and the NSE (National Stock Exchange) in India. For more information, visit www.tcs.com