Prudential Contract

Capita Group PLC
28 November 2007



28 November 2007

                      CAPITA SELECTED BY PRUDENTIAL UK
                      AS STRATEGIC OUTSOURCING PARTNER

  • £722 million, 15 year contract to deliver annual savings of £60 million to 
    Prudential by 2010

  • Capita's offshore operations more than doubled through acquisition in Mumbai

The Capita Group Plc ('Capita') announces that it has today signed a contract to
become a strategic outsourcing partner of Prudential UK ('Prudential'), to
administer 7 million mature life and pensions policies including group and
individual pensions, investment bonds and life and endowment policies. The
contract is worth approximately £722 million over 15 years.

Capita will provide customer servicing, policy administration, new business
processing, claims activity and related IT support to Prudential UK. Under the
terms of the agreement, the detail of which is subject to a collective
consultation process, approximately 1,750 Prudential staff working in the UK,
1000 in Craigforth and 750 in Reading, will transfer to Capita under the
Transfer of Undertakings (Protection of Employment) Regulations (TUPE) in April
2008.

As a key element of the deal, Capita will acquire business and assets from
Prudential, for a consideration of £25 million, including part of the business
of PPMS, Prudential's offshore operation based in Mumbai, involving the transfer
of 1,250 staff. Although TUPE does not apply in India, all affected employees
will transfer in the spirit of the legislation, ensuring protection of their
existing terms and conditions.

£100 million of the deal is an investment by Prudential UK, over six years, to
fund a transformation programme. The programme will deliver enhanced customer
service through a substantial simplification of policy administration processes
and migration of in-force and new business policies from Prudential's legacy IT
systems to two Capita platforms.

Paul Pindar, Chief Executive of The Capita Group commented: 'Capita is delighted
to engage in this strategic alliance with Prudential UK. Our aim is to build a
mutually beneficial partnership to support the further growth of both Prudential
and Capita in the life and pensions industry. We look forward to working with
Prudential to deliver high quality outsourced support and welcoming all
transferring staff to the Capita Group's thriving life and pensions business.

'We are committed to expansion in both the UK life and pensions market and our
Indian operations to meet increasing demand. The operations and employees that
will transfer to Capita under this agreement will allow us to take a significant
step forward with these ambitions. The Craigforth operation will be developed
into a centre of excellence for life and pensions administration. The Reading
operation will initially continue to be delivered from its current site while we
investigate the feasibility of combining it with our operations in Cheltenham or
Swindon or from an alternative site in Reading. And in Mumbai the combination of
our increased scale and capability will provide a market leading offshoring base
from which to support our plans across the broad range of our service 
offerings.'

Nick Prettejohn, Chief Executive, Prudential UK & Europe said: 'The agreement
with Capita is another significant milestone in our programme to deliver
continued superior performance and profitability in our UK business. We have set
out very clear priorities for the business and this agreement helps us to
deliver our strategy by removing fixed costs from our operations and achieving
significant operating efficiencies. It will allow us to concentrate on using our
competitive strengths and proven capabilities to realise the attractive
opportunities in the market for retirement savings and income.

'After detailed analysis of a number of potential options, it was clear that
Capita best enables us to deliver continued high levels of customer service
while providing ongoing certainty over costs. They are a partner with a proven
record of high standards of service for customers and advisers, IT delivery and
support while also offering the best overall employment solution for our staff.'

Capita provides core administrative support to a number of UK and overseas life
and pensions companies, including the Children's Mutual, Lincoln Financial
Group, Resolution, Zurich and Co-operative Financial Services. Including this
agreement, Capita Life & Pensions will be responsible for administering
approximately 23 million policies.

Capita already delivers a range of life and pension sales and administration
services for Prudential UK's business. Prudential and Capita signed an
outsourcing agreement in 2006 under which Capita delivers end-to-end support for
Prudential's UK life and pensions operations from Prudential's Belfast
operation. Capita has also been successfully providing a full range of life and
pensions administration services for Prudential's international cross border
life assurance portfolio of new and existing business since 2003.

                                     -ends-

For further information:

The Capita Group Plc
Tel: [phone]
Paul Pindar, Chief Executive
Shona Nichols, Corporate Communications Director

Capita press office
Caroline Mooney
Tel: [phone] 2400 488 (out of hours)

Prudential Group press office
Jon Bunn
Tel: [phone]
William Baldwin-Charles
Tel: [phone]

Prudential UK press office
Steve Colton
Tel: [phone]
Darragh Leeson
Tel: [phone]

Note to editors

The Capita Group Plc is the UK's leading provider of integrated professional
support service solutions. The Group's service capabilities encompass business
process outsourcing, (BPO), customer services, administration and support, human
resources, ICT, property consultancy, finance & treasury and consultancy
delivered to both public sector and private organisations. With 28,500 employees
at more than 250 offices across the UK, Channel Islands, Ireland and India,
Capita is quoted on the London Stock Exchange (CPI.L), and is a constituent of
the FTSE100 with revenues for 2006 of £1,739 million. Further information on The
Capita Group Plc can be found at:  www.capita.co.uk


Prudential UK

Prudential is a leading life and pensions provider to approximately 7 million
customers in the United Kingdom.  Prudential UK has offices located in London,
Reading, Belfast, Dublin and Stirling, and a customer service centre in Mumbai.
Products: Bulk and Individual Annuities, Corporate Pensions, With-Profits and
Unit-Linked Bonds, Savings and Investments, Lifetime Mortgages, Healthcare and
Protection. Distribution Channels: Direct-to-customers/PruDirect (telephone,
internet and mail), Financial Advisers, Business to Business (consulting
actuaries and benefit advisers), and Partnerships (affinities and banks).

Mature Life and Pensions ('ML&P') is the term used to describe the collection of
products Prudential holds for its existing life and pensions customers. The
business comprises the vast majority (approximately 8 million policies) of
Prudential UK's in-force policies. It consists of group pensions, individual
pensions, investment bonds and life and endowment policies (annuities, lifetime
mortgages, protection and healthcare are not included within the book of
business). Most of these products are still open to new business, for instance
through top-ups, but the main role of the ML&P operation is to look after this
existing business and get the best possible value from it for shareholders and
policyholders. Prudential expects that this business will continue to be a
significant source of new business, particularly through internal vestings and
in the corporate pensions arena.

The Mature Life and Pensions back-book represents around two-thirds of
Prudential UK's total cost base. A key priority for Prudential is to continue to
deliver embedded value through the ML&P business and as the back-book runs down
over the course of the next few years (over 40 per cent of the in-force policies
mature in the next five years), this creates an inherent pressure on unit costs.
As large proportions of the costs are currently fixed, this means that unit
costs would continue to rise beyond the levels allowed for when the policies
were originally sold. Prudential, therefore, highlighted an aggressive target to
reduce per-policy unit processing costs in line with the reducing numbers of
in-force policies.


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            The company news service from the London Stock Exchange