India's largest IT firm Tata Consultancy Services Ltd (TCS) today said it has bagged an over $2-billion deal from Transamerica to transform the latter's US insurance and annuity business lines.
Transamerica is a leading provider of life insurance, retirement and investment solutions. The partnership with TCS will enable it to rapidly enhance its digital capabilities, simplifying the service of more than 10 million policies into a single integrated modern platform, TCS said in a statement.
The multi-year agreement is worth more than $2 billion in revenues, and is expected to be completed by the second quarter of this year, it added.
The partnership will enable the transformation of the administration of Transamerica's life insurance, annuity, supplemental health insurance, and workplace voluntary benefits products. It will also support the company's overall transition to a simplified, cloud-enabled platform for agile new product development, enhanced services, acquisitions, and strategic innovation investments, the statement said.
This agreement is expected to lead to annual run-rate savings of approximately $70 million initially – growing to $100 million over time – for Transamerica, and is expected to benefit underlying earnings.
The announcement comes a day after TCS reported a 3.6 per cent fall its net profit to Rs6,531 crore in the December 2017 quarter. The Mumbai-headquartered company had posted a net profit of Rs6,778 crore in the October-December quarter of the previous financial year.
"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 utilising our digital engagement platforms and developing new solutions that help people save, protect, invest and retire," said Mark Mullin, president and chief executive of Transamerica.
TCS said it will make job offers to all of the eligible 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".
It added that employees transitioning to TCS will be given the opportunity to remain in the same US cities where they are currently based. TCS will also expand its existing relationship with Transamerica under this transaction, and locate in Transamerica's current offices in various US cities.
"We have invested heavily in our insurance digital platform, TCS BaNCS, and our extensive US capabilities, and are proud to partner with Transamerica in its ongoing transformation and welcome the transitioning employees to promising new careers at TCS," TCS chief executive and managing director Rajesh Gopinathan said.
TCS plans to make a significant investment in the region, most notably by establishing a new North American insurance hub for business operations in Cedar Rapids, Iowa.
Apart from offering roles to 2,200 Transamerica employees, TCS also 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.
TCS president and global head, banking, financial services and insurance platforms Suresh Muthuswami said the deal marks TCS' entry into a highly specialised US Insurance Third Party Administration marketplace and will establish TCS BaNCS as a formidable digital platform for the US insurance industry.
TCS BaNCS has had a strong play in the European market for more than a decade, with 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, the statement said.
It will also support Transamerica's overall transition to a simplified, cloud-enabled platform for agile new product development, enhanced services, acquisitions, and strategic innovation investments, it added.