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Capita wins significant private sector contract £323 million contract secured with Abbey National plc

The Capita Group Plc ("Capita"), the leading UK professional support services organisation has been selected as a core partner by Abbey National plc in a contact worth approximately £323 million over 10 years. This contract significantly increases Capita's private sector business and is a key platform for further penetration of the financial services sector.

Abbey National has chosen Capita to develop, manage and administer the systems development and core-processing activities of their general insurance business. Capita, through Capita Eastgate, the Group's insurance support services operation, will administer all active policies and associated claims for Abbey National's home, motor, travel and creditor insurance products. Norwich Union will continue to underwrite and settle claims for the majority of these products on an exclusive basis, with a choice of competing insurers underwriting the remaining products. Claims settlement will be undertaken by Capita and Norwich Union.

Rod Aldridge, Executive Chairman of The Capita Group Plc, commented:

"We are delighted to have this opportunity to support Abbey National in growing its general insurance business. The new capabilities we bring to the partnership will enable Abbey National to be fir more flexible in meeting customer needs, responding to individual's particular requirements and their chosen method of communication and transaction. It will be a seamless and flexible service meeting Abbey National's requirements now and into the future.

"The contract is a key step forward in the growth of Capita's private sector business, being the largest single contract by some magnitude that we have won to date in this sector. Expertise in the insurance sector, gained through our acquisition of the Eastgate Group, combined with Capita's track record of delivering excellence in customer service and our ability to provide leading edge technology solutions enabled us to secure this wide ranging contract. It provides us with a strong platform for further penetration of the insurance market and the wider financial services sector."

Andrew Pople, Abbey National's Managing Director of Retail Banking, said:

"Our agreements with Capita and Norwich Union mean we can grow our general insurance business by delivering real customer choice and value, coupled with excellent service and efficiency levels.

"Our choice of partners, and our withdrawal from underwriting and general insurance administration, reflects our strategy of focusing on making it easier for our customers to take out good value insurance cover which is suitable for their needs and on which they can fully rely."

Capita not only brings expertise in administering and improving business processes but will also introduce leading edge technology to increase service flexibility and quality, assisting Abbey National in maintaining and developing competitive advantage in an increasingly demanding sector. Capita will initially deliver services through Abbey National's legacy systems before transferring policies gradually to a new technology platform, Consumer Direct, jointly developed by Capita Eastgate and Cap Gemini Ernst and Young.

Consumer Direct was developed to meet the need for an e-enabled insurance process outsourced capability for the general insurance market. It provides the platform for market-leading product flexibility and straight through processing, providing a more individually responsive customer service, multi-channel access, cost efficiencies and the ability to support a pool of risk carriers. Consumer Direct will enable customers to deal with Abbey National through the route of their choice, including branches, telephone and mortgage introducers, as well as through the internet, meeting the company’s e-commerce strategy.

Significant investment spend by Abbey National in the region of £50 million is planned over the next 36 months to deliver a single systems platform with new products, multi-channel access and excellent service standards.

Abbey National staff in Bradford and Liverpool responsible for customer service and some claims handling staff in Bradford will transfer from Abbey National to Capita on March 2001. Exact numbers are being finalised at present.

In October 2000, Capita acquired the remaining 74% of the issued share capital of Eastgate Group Limited that it did not already own for an initial consideration of £9.1 million and a deferred payment of 862,053 shares in Capita and £0.75 million in cash. The deferred payment now becomes payable on 30 September 2001 as a consequence of signing the above contract with Abbey National.

Capita will be announcing its results for the year ending 31 December 2000 on 22nd February 2001.