Tata Consultancy Services said it will take over the policy administration and customer service functions of US insurer Transamerica along with 2,200 of its employees in a $2 bln-plus, multi-year deal.
The Indian company will migrate the administration of over 10 mln insurance policies on to its BaNCS platform and provide ‘third party administration’ or TPA services to the US company.
“The multi-year agreement is worth more than $2 billion in revenues, and is expected to be completed by the second quarter of 2018,” the Indian company said. “We welcome the transitioning employees to promising new careers at TCS.”
However, it was not clear how much revenue the contract would generate per year and how much would be one-time.
The American company said it expects to save $70 million initially, growing to $100 million overtime, from the contract, indicating the deal should generate several hundred million dollars in revenue for TCS every year.
TCS said the move will help the insurer transition to a simplified, cloud-enabled platform based on its BaNCS platform, which will help new product development, provide enhanced services, acquisitions, and strategic innovation investments.
“TCS will provide valuable administration and quality customer service, and Transamerica will continue to engage with our customers, clients and advisors in the most meaningful ways to them by utilizing our digital engagement platforms and developing new solutions that help people save, protect, invest and retire,” Transamerica said.
TCS will make job offers to all of the applicable Transamerica employees currently supporting the life insurance, annuity, supplemental health insurance and workplace voluntary benefits business lines.
This, it said, will ensure a “consistently excellent experience” for Transamerica customers and protecting approximately 2,200 American jobs.
Employees transitioning to TCS will be given the opportunity to remain in the same U.S. cities where they are currently based.
TCS said it has adapted the BaNCS platform for the U.S. market to meet the country’s operational and regulatory needs.
“This agreement with Transamerica 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,” said Suresh Muthuswami, President and Global Head, Banking, Financial Services and Insurance Platforms at TCS.
TCS’s solution for banks and insurers, BaNCS, has developed recognition in the European market, where it has been present for more than a decade and has more than 17 million policies under administration.
“The partnership will enable the transformation of the administration of Transamerica’s life insurance, annuity, supplemental health insurance, and workplace voluntary benefits products,” it added.
TCS will also expand its existing relationship with Transamerica under this transaction, and locate its operations and staff in Transamerica’s offices in various U.S. cities.
TCS’ announcement comes hours after the company announced its December quarter results that were largely in line with Street expectations.
Transamerica providers life insurance and investment products, individual and group pension plans, as well as asset management services.
“TCS’ transformation and technology innovation capabilities will supplement our focus on improving our customers’ experience in a digitally enabled way,” said Mark Mullin, Transamerica President & Chief Executive Officer.
“TCS was carefully selected because of their significant, ongoing investments in technology and their expertise in the insurance and annuity industry.
TCS said it plans to make a significant investment near the American company’s headquarters, most notably by establishing its new North American insurance hub for business operations in Cedar Rapids, Iowa.
“Beyond offering roles to 2,200 Transamerica employees across U.S cities, TCS plans to hire locally in Iowa, set up relationships with educational institutions, and help employees with professional development to gain digital skills and fluency,” it said.