Transamerica has agreed to hire Tata Consultancy Services to administer its life insurance, supplemental health insurance, voluntary benefits and annuity businesses, Aegon N.V. announced today.
Aegon, Transamerica’s Dutch parent, said Transamerica hopes to close on the deal by June 30.
The deal could affect about 2,200 U.S. workers, Aegon said.
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“All of the Transamerica employees currently supporting these business lines and whose roles are in scope will be offered positions” by Tata, Aegon said.
Aegon expects to record $100 million in conversion and transition charges for the arrangement in the first half of this year, and a total of $280 million in charges related to the shift over three years. It’s hoping the arrangement will cut operating costs by $70 million to $100 million per year.
The Transamerica employees who transfer to Tata will be able to stay in the U.S. cities where they’re based now, Aegon said.
Aegon is a life insurer and asset manager with headquarters in the Hague, in the Netherlands.
Transamerica was once based in San Francisco. It now has its headquarters in Baltimore and other main offices in Denver and in Cedar Rapids, Iowa.
In June 2017, Aegon transferred responsibility for about $14 billion in Transamerica life and annuity liabilities to Wilton Re Ltd., a unit of the Canada Pension Plan Investment Board.
Aegon issued the announcement of the Transamerica-Tata deal through its corporate headquarters, in the Hague.
Tata Consultancy Services is a Mumbai, India-based affiliate of the Tata group. To support the Aegon deal, it will set up a new North American insurance operations hub in Cedar Rapids, Aegon said.
Tata has invested $3 billion in the United States over the past three, and it has contributed to schools such as Carnegie Mellon University, Cornell and the Massachusetts Institute of Technology, Aegon said.
Suresh Muthuswami, a Tata Consultancy Services executive, said in a statement about the agreement is that Transamerica would be the first client to use Tata Consultancy Services as a third-party insurance administrator in the United States.
What’s Included, and What’s Not
Transamerica will continue to administer long-term care insurance (LTCI) policies in-house, for now, but it may enter into a similar outsourcing arrangement with Tata for the LTCI business, Aegon said.
Transamerica plans to continue to handle administration of retirement plans, individual retirement accounts, mutual funds, exchange-traded funds, stable-value arrangements and its Advice Center through the programs in place now, Aegon said.
Mark Mullin, Transamerica’s chief executive officer, said in a statement that the new arrangement will support meaningful growth in all business lines, including insurance and annuities.
Tata “will provide valuable administration and quality customer service,” Mullin said. “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 to help people save, protect, invest and retire.”
—Read Canadian Pension Board Reinsurance Arm Closes on Aegon Deal on ThinkAdvisor.