IBM and Fortitude Re (the marketing name for FGH Parent) have signed an agreement worth $450m to transform and optimise the latter’s life insurance and annuity third party administration operations.

The parties will collaborate for a period of 10 years to administer more than four million insurance policies.

Under the terms of the agreement, IBM will streamline Fortitude Re’s life insurance policy servicing operations by deploying artificial intelligence (AI) technology and other automation tools to deliver better customer experience for policyholders and insurers.

In order to utilise IBM’s global capabilities to offer insurance third-party administration (TPA) services, Fortitude Re has selected the tech major’s subsidiary, IBM Insurance Solutions.

Fortitude Re chief operating officer Sean Coyle said: “Combining Fortitude Re’s deep industry expertise with IBM’s technology leadership will enable us to deliver effective and efficient administration solutions as part of our bespoke solution design for our Life & Annuity customers.

“By partnering with IBM, Fortitude Re will be able to leverage AI technology, automation, and the latest in advanced data analytics to help continue delivering a high-quality service experience for the millions of insurance customers we service, all while reducing operational risk, improving efficiencies, and increasing our analytic capabilities.”

IBM said that it will develop and handle a custom, optimised solution for managing life and annuity insurance policies to support Fortitude Re to strengthen its third-party administration operations.

The solution will also boost Fortitude Re’s commitment to customer-centric service for policyholders and insurer clients apart from securing operational expense reductions.

Besides, IBM will help Fortitude Re to offer end-to-end process optimisation of its insurance customer service operations. This will provide flexibility and scalability to benefit from new business growth opportunities with an open ecosystem approach.

IBM Consulting financial services managing partner Vijay Vijayasankar said: “The insurance industry continues to be an important focus for IBM with significant opportunity to apply our industry expertise and technologies to solve complex challenges facing insurers.

“We are committed to working hand-in-hand with Fortitude Re to enhance security and customer experience while also pursuing growth and efficiency.”

IBM Consulting will lead the initiatives, which will include AI for automation, hybrid cloud and main-frame-as-a service technology.