IBM and RBC Insurance today announced that IBM has agreed to acquire Liberty Insurance Services Corp. (LIS), the U.S. business process services and solutions operations of RBC Insurance.
This acquisition will establish IBM as a leader in life insurance and annuity processing and administration, both in North America and globally. Financial terms of the deal, expected to close by December 31, 2004, were not disclosed.
In addition, IBM and RBC Insurance have also agreed to enter into a long-term agreement for IBM to perform key business processes for RBC Insurance's U.S. operations, including contact center management, policy administration, claims management and payment receipt and reconciliation.
Following the acquisition, it is expected that approximately 700 LIS employees will remain and become part of a new subsidiary of IBM. This new IBM organization will focus on delivering life insurance and annuity processing and administration services and will integrate its deep process expertise with IBM's advanced consulting methodologies and emerging technologies, such as real-time process and data integration, enabling IBM to offer real business optimization value to life insurance clients.
RBC Insurance's U.S. operations will remain based in Greenville, SC, where it has over 200 employees. The company also has a presence in Kansas City, MO, and a field force of approximately 400 full-time agents.
"We continue to view the United States as strategically important to the growth of our insurance business," said Jim Westlake, Group Head Personal and Business Clients Canada and Global Insurance for RBC Financial Group. "The acquisition of Liberty Insurance Services Corporation by IBM allows us to focus on our core insurance businesses by leveraging the experience and technology of a leading third party administrator."
Upon closing, the new IBM subsidiary will handle life and annuity policy processing for more than a dozen life insurance companies worldwide. Services offered by this new IBM organization will include contact center management, policy administration and claims processing. In this field, life insurance companies are seeking the ability to manage their portfolio of life insurance and annuity contracts more dynamically, in order to reduce cost, increase flexibility, improve customer satisfaction, and respond to new market opportunities.
"Life insurance processing and managed operations is expected to represent a $2 billion market globally by 2005, and this acquisition, combined with IBM's business consulting and technology skills, significantly expands our business transformation capabilities for insurance providers worldwide" said Katherine Hegmann, General Manager, IBM Global Business Transformation Outsourcing. "This acquisition adds new skills and processing capabilities, significantly strengthening our policy management, claims administration and payment receipt and reconciliation capabilities. These specialized insurance industry services, together with our existing business transformation capabilities for human resources, customer care, finance and administration and procurement, will help clients in the insurance industry derive new business value from an IBM relationship."
"This deal is consistent with RBC Insurance's objective of providing our customers with value and innovative products. We are pleased to establish this business relationship with IBM," Westlake said. "In today's highly competitive environment and quickly evolving financial services market, we need to concentrate resources and attention on our insurance clients to provide them the strongest value proposition possible. IBM is ideally suited to make the necessary investments that will allow LIS to grow in the future, provide our U.S. insurance businesses and its other customers excellent service and, ultimately, to allow LIS to meet its potential."