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Royal & Sun faces £98m bill for 2000 bug

Royal & Sun Alliance will be stung with a £98m bill for making its computer systems Year 2000 compliant.

Technology experts believe computer systems could be thrown into chaos in 2000 because they have not been programmed to cope with the change of date. Updating systems is likely to cost the industry billions of pounds.

The ABI has estimated the cost to life offices at up to £500m. But R&SA&#39s bill suggests that the total is likely to be significantly higher.

R&SA operates five pension systems because of acquisitions made by Royal Life and Sun Alliance. None is Year 2000 compliant.

The company has a total of 10 separate computer systems. The costs of updating these will come out of its annual profit. Year 2000 program manager Terry Fry says: "The problem is that the merger process of our systems is a long-term process. But the Year 2000 problem is a short-term one."

The Financial Services Authority is demanding regular reports from life offices on progress with making systems compliant and is threatening to stop firms trading if they do not comply.

Abbey National made a £75m provision for making itself Year 2000 compliant. Eagle Star says it has spent about £20m on the problem.

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