Pensions and insurance provider Prudential has announced operating profit for 2007
up by 25 percent and said its outsourcing deal with Capita was central to an ongoing cost cutting drive.
In November 2007 Prudential signed a 15 year outsourcing deal with services company Capita worth £722 million.
In its annual report Prudential described the Capita deal as “a key milestone,” allowing it to outsource a large proportion of its back book and new business policy administration.
“The outsourcing agreement will allow us to remove fixed costs from our operations and to achieve significant operating efficiencies with an expected positive effect on embedded value estimated at £60 million by 2011.”
Under the deal, Capita took over the administration of seven million mature life and pension policies, group and individual pensions, investment bonds and endowments. It provides Prudential with customer service, policy administration, new business processing and IT support as part of the deal.
Prudential announced total operating profits of £2.5 billion and that it had achieved £115 million of the cost savings from a target of £195 million.
The Prudential results followsimilar good news from Standard Life earlier this week.
Prudential also sold off the Egg internet banking operation last year for £527 million.