Large Nordic Business Groups in Strategic Agreement with IBM

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STOCKHOLM, Sweden, 10t - 10 May 2000: -- The Nordic savings and insurance companies Skandia, Storebrand and If Property & Casualty Insurance and retailing group ICA AB have together with IBM entered into the largest strategic outsourcing agreement ever in northern Europe.

Under the agreement, IBM Global Services becomes a strategic partner for IT infrastructure and the management of the Nordic insurance companies' IT systems, including all management and infrastructure such as mainframe computers and servers, operating systems, business programs, telephony and data communications, local service and help desk. Each company, however, retains its own systems development and administration. For ICA AB, the agreement is limited to mainframe operations. The agreement, which is expected to exceed USD 1 bn over the next 10-year-period, is one of the first large agreements of its kind in the insurance industry.

Strategic outsourcing is a fast-growing market in the US and now also in Europe. The launching of advanced customer-oriented systems enables professional service companies, such as IBM, to develop professional services and help in the management of what can otherwise be very large and complex system environments.

Per Bragée, CIO at Skandia, comments: "We expect to improve cost effectiveness by about 25-30 per cent while retaining the same high level of customer access to our services. Skandia operates in more than 20 countries, and IBM's global infrastructure therefore matches our organization well."

"IBM is in a good position in the outsourcing market thanks to the company's proven ability to develop market-leading, flexible and scalable technical solutions, its leading position in e-business and its worldwide experience of helping customers through long-term partnership in outsourcing," says Frank Kern, General Manager, Professional Services, IBM Global Services, Europe/Middle East/ Africa (EMEA). "By choosing IBM, Skandia, Storebrand and If also gain access to our global insurance expertise as well as solutions for other business sectors."

The background to the agreement with IBM is the decision by Storebrand, Skandia and Pohjola to form the Nordic region's leading property & casualty insurance company, If. To achieve the planned synergies it was essential to develop a shared IT infrastructure.

"Today's, and especially tomorrow's, savings and insurance industries rely on the extensive use of IT. Outsourcing the entire management of our IT systems will enable us to concentrate on our core business, including business development," says Per Bragée.

"The importance of IT infrastructure is constantly increasing. With a growing share of self served customers and a major growth in e-solutions, we need a strategic partner for our infrastructure. By closing such a deal, we will be able to make faster and larger investments than before. In addition, this will help us to cut down on our expenses and increase our degree of development," says Rolf Corneliusen, CIO, Storebrand.

The agreement includes the transfer of almost 400 people working with IT infrastructure at Skandia, Storebrand and ICA, primarily in Sweden and Norway.

Skandia, which has 5,700 employees and 1999 sales of USD 16 bn (SEK 134 bn), operates in the areas of life assurance and long-term savings. Storebrand, which operates in the same areas, has 1,300 employees. Its combined sales in 1999 were USD 3,18 bn (NOK 35 bn). If, which has 5,350 employees and operates in property & casualty insurance in Sweden, Norway, Denmark and Finland, had 1999 sales of USD 2.3 bn (SEK 20 bn).

IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. IBM offers a wide range of services, solutions and technologies that enable companies to take full advantage of the new era of e-business. IBM Global Services, with 1999 revenues of over $32 billion and more than 138,000 professionals serving customers in 160 countries, is the world's largest information technology services provider. IBM Global Services integrates IBM's broad range of capabilities -- services, hardware, software and research -- to help companies of all sizes realize the full value of information technology.

ICA is the leading retailing group in the Nordic region with strong brands such as ICA and RIMI. There are nearly 4,600 stores in ICA´s network - primarily in Sweden and Norway, but also in Denmark, Latvia, Lithuania and Estonia. In 1999, ICA´s store sales were approximately USD 14,9 bn. The ICA Group has 47,000 employees.

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