2nd Qtr New Business Figures

CGNU PLC 19 July 2000 Worldwide long-term savings new business first 6 months of 2000 - Worldwide new business sales increased by 18% to £6.1 billion (APE* up 25% to £1 billion) - New regular premium sales up 37% to £0.5 billion - Total single premium sales 17% higher at £5.6 billion - Total UK new business sales increased by 24% to £3.7 billion - Worldwide retail investment sales up 21% to £0.8 billion *APE (annual premium equivalent) is total new annual premiums plus 10% of new single premiums. Bob Scott, Group Chief Executive, commented: 'These are excellent figures from our United Kingdom and overseas businesses with healthy increases in new business since the announcement of the merger between CGU and Norwich Union in February. Our distribution power will increase through bancassurance alliances in both the United Kingdom and Spain and we believe that the financial strength of the group combined with our excellent long-term investment performance will increasingly make our products attractive to investors and financial advisors.' Enquiries: Media: Charles Watson, Financial Dynamics +44(0)20 7831 3113 Analysts/Investors: Philip Scott, Group Executive Director UK Life +44(0)19 0445 2827 Tom Fraser, Managing Director, Europe +44(0)20 7662 2100 Steve Riley, Investor Relations Director +44(0)20 7662 8115 Single Regular Total 6 Local 6 Local Local months currency months currency currency to 30 growth to 30 growth growth June June 2000 2000 £m £m Life and pensions United Kingdom 2,966 27% 182 21% 27% France 968 49% 21 (5%) 47% Ireland 198 74% 25 170% 81% Netherlands 203 33% 32 (8%) 25% Poland 5 (8%) 131 312% 266% Spain 37 197% 5 (29%) 116% Other Europe 183 (71%) 42 (28%) (67%) International 228 2% 23 5% 2% ------ ------ ------ ------ ------ Total life and 4,788 16% 461 37% 18% pensions Investment sales United Kingdom 510 10% 11 38% 10% Other Europe 121 114% - - 114% International 166 18% - - 18% ------ ------ ------ ------ ------ - Total investment sales 797 21% 11 38% 21% ------ ------ ------ ------ ----- Total long-term 5,585 17% 472 37% 18% savings ====== ====== ====== ====== ====== United Kingdom: The new business figures reflect a continued strong performance since the merger was announced in February 2000. We believe the financial strength of the combined Group has proved to be attractive to investors and that on-going support from financial advisors has helped to push up sales in the run up to the summer months. Total United Kingdom new business sales increased by 24% to £3.7 billion in the first half of 2000 and in APE terms were 23% higher at £541 million. The long-term savings businesses of Norwich Union and CGU now command an estimated UK market share of 10% giving a leading position in the life and pensions market place. CGNU is the leading provider to the IFA market and IFA business has grown strongly in the first half of the year, increasing by 31% over the first six months of 1999 and also showing an 8% quarter on quarter improvement in 2000. IFAs provide over 75% of CGNU's long-term business in the United Kingdom. New regular premiums increased by 21% to £193 million. The combined businesses have a market leading position in term assurance sales based on first quarter figures, supported by very strong growth in the second quarter. Bond and savings sales showed an impressive increase of 24% in new business single premiums to £1.7 billion. The significant success of bond sales is attributed to the continued support by IFAs underpinned by the attractive product range in the current economic climate. Total individual pension sales increased by 31% to £559 million and group pensions increased 59% to £357 million reflecting CGNU's broad and competitive position and very proactive stance towards building market share in the run up to stakeholder pensions coming on stream in 2001. A major component of this is pooled managed pension funds, where improved investment returns have been instrumental in attracting new business. Sales of annuity products have increased by 5% to £420 million, reflecting continued growth in sales of with-profit annuities of £71 million (1999: £15 million), and our continued policy of pricing conventional annuities for profit as well as volume. Sales of our Cat-standard Isa range continue to be very attractive to investors and have increased over 500%, reflecting the investment made in this business. Following the merger of CGU and Norwich Union, a single marketing group will be launched in October 2000 and, until that date, the two existing marketing groups will continue to operate as separate units. The product range and branding announcements in respect of the future single marketing group will be made in the lead up to the launch date. The new range will represent the best benefits and product features from both long-term savings businesses. Partnerships and strategic alliances with a range of other leading UK brand names promote further growth opportunities as additional distribution routes expand and open up. Alliances with leading United Kingdom brand names, The Royal Bank of Scotland and Tesco, will further promote strong and innovative business performance within the life, pensions and investment arena. Having stated its intention to be a major provider of stakeholder pensions, CGNU became one of the first to launch a new pension product that meets the Government's minimum standards in the pre-stakeholder pension phase - Your Pension @ CGU, with other complimentary product initiatives to follow. The pension offers investors charge-free policies until April 2001 and free transfers in, as well as a highly competitive charging structure for April 2001 onwards, designed to encourage persistency and higher investments. An associated development has been CGNU's e-commerce functionality for this product that brings on-line pension applications to the market place for the first time. France: The combined French businesses produced excellent figures, on the back of the performance established in the first quarter with further strong growth in unit-linked products. New single premiums, which dominate the market, increased by 49% to £968 million, ahead of overall market growth. AFER, the largest savings organisation in France, increased sales of its bond products by 14% over the first six months of 1999. Sales of SFER, the unit-linked product of AFER, increased sales by 240% to £177 million, continuing the trend established in the first quarter, to provide 33% of total AFER sales. Total sales of unit-linked and other savings products were more than double the first six months of 1999, reflecting the trend towards unit-linked products following strong equity performance in 1999 and the low interest rate environment. Ireland: The CGNU Irish business represents the combination of Hibernian, CGU and Norwich Union Ireland and positions us as one of the top five providers of new life and pensions business. The combined businesses produced a set of excellent figures continuing the performance reported in the first quarter. New single premium sales, up 74% over first half 1999, include a £51 million contribution from Hibernian and reflect the continued success of the Norwich Union Celebration Bond and CGU bond products. The increase in regular premium sales, up 170% over first half 1999, principally reflects the impact of the Hibernian acquisition earlier this year. Netherlands: Delta Lloyds Nuts Ohra has a market share of around 6%, making it the third largest life and pensions insurer in the Netherlands. Single premiums were up 33% at £203 million, reflecting the inclusion of £41 million from the acquisition of Nuts Ohra following good individual pensions sales. Regular group pensions sales were up 12% although sales of individual life products were slower ahead of planned tax changes. Poland: The Polish pensions business reported regular premium sales of £109 million (1999: £2 million) in the first six months of 2000. Of the reported regular premiums, £99 million (1999: £2 million) was contributed by the CGU business, the market leader for private pensions, representing the processing of 507,000 pensions cases. The regular premium sales reported by the Norwich Union business of £10 million represented the processing of 65,000 pension cases. Further new pension customers have been won as they enter the market, attracting 46,000 in our CGU business and 9,000 in our Norwich Union business in the first six months of this year. The combined Polish life operation comprises CU Polska, a leading life business, together with the Norwich Union life business launched in January 2000. CU Polska maintains its overall market position second only to PZU, the former state insurer. The combined business sales were lower than in the same period in 1999, reflecting the previous high level of activity in the pensions and life market. Market share based on total premium income has been maintained at around 20%, including the £2 million regular premium contribution from the Norwich Union business. Long term growth prospects remain very good, with less than 20% of employed people having an individual life policy. Spain: Our Spanish businesses returned a near 200% increase in single premium sales, reflecting the launch of unit-linked life and savings products in the second half of 1999. On 19 May 2000 we announced a new bancassurance partnership with Bancaja, Spain's fourth largest savings bank, where we will acquire 50% of the share capital and control of Bancaja's life insurance subsidiary, Aseval. The combined operations will be a top ten life and pensions provider in Spain, with exclusive access to Bancaja's distribution network of around 1,000 branches. This transaction is subject to regulatory approval and we expect a contribution to new business to commence in the second half of this year. Other Europe: Italy: We continue to explore opportunities to build our bancassurance distribution network. Our partnership with Banca delle Marche, launched in September 1999, has continued to produce strong single premium sales of £36 million. Activity with our bancassurance partner, Banco Popolare di Lodi, has by contrast focussed on regular premium sales that increased by 200% to £3 million. The reduction in Other Europe when compared to 1999 principally reflects the cessation of our exclusive bancassurance agreement with Credito Italiano last year. Other businesses: The initial European version of Navigator, based upon the internet-enabled fund of funds service operated by our Australian business, boosted single premium sales by £20 million. This business offers tax- efficient products to high net worth individuals and operates out of Dublin. Our business in Luxembourg has continued the strong performance reported in quarter one for sales of UCITS (collective investment schemes), up 114%. Our German business has seen annual premiums up 42% to £19 million and single premiums of £26 million. Good progress has also been made in our smaller businesses in Belgium, Czech Republic, Portugal and Turkey. In Turkey, we continue to prepare for the new opportunities presented by private pensions legislation currently before parliament, and hope to be one of the first companies to be granted a pensions licence later this year. Annual premium sales were up by 64% to £12 million. International: The result from International consists principally of our businesses in Australia and North America. Our Australian life and pensions business posted a 23% increase in single premium business to £123 million and a 50% increase in regular premium business to £7 million. Our Australian unit trust business reported an 18% increase to £166 million. Our United States business reported sales of £94 million. Total sales from the Norwich Union fund of funds Navigator product in Australia increased to £376 million, an increase of 33% on 1999 levels, giving total funds under administration of £2.2 billion. On 14 June 2000 we announced the intention to sell our Canadian life businesses, which contributed £7 million of regular and £19 million of single premium sales. Notes to Editors 1. CGU and Norwich Union merged on 30 May 2000 to create CGNU plc the UK's largest insurance group and one one of the top-five life insurers in Europe with substantial positions in other markets around the world making it the world's 6th largest insurer based on gross worldwide premiums. CGNU's principal business activities are long-term savings, fund management and general insurance with worldwide premium income and retail investment sales of £26 billion and assets under management of more than £200 billion. From October, the combined life and pensions, retail fund businesses and general insurance in the UK will operate under the Norwich Union brand, while the institutional investment business will operate under the Morley Fund Management brand. 2. The worldwide new business figures presented are combined CGU and Norwich Union. 3. New business figures have been translated at average exchange rates applying for the period. 6 months 6 months to 30 June to 30 June 2000 1999 France - francs £1 = 10.73 £1 = 9.78 Ireland - punts £1 = 1.29 £1 = 1.17 Netherlands - guilders £1 = 3.60 £1 = 3.29 Poland - zloty £1 = 6.65 £1 = 6.25 Spain - pesetas £1 = 272.16 £1 = 247.75 4. All growth rates are quoted in local currency. 5. Annual premium equivalent (APE) is an industry standard for calculating life, pensions and investments new business levels. It is the total of new regular premiums plus 10% of single premiums. Annual premium equivalent 6 months Local to 30 currency June growth 2000 £m United Kingdom IFA 422 28% Partnerships/Direct 119 8% ------ ------ 541 23% France 118 35% Ireland 45 116% Netherlands 52 4% Poland 132 308% Spain 9 6% Other Europe 72 (44%) International 62 7% ------ ------ Total long-term savings 1,031 25% ====== ====== CGNU plc is a company registered in England No. 2468686. Registered office St Helen's 1 Undershaft London EC3P 3DQ Single Regular 6 6 Local 6 6 Local months months currency months months currency to 30 to 30 growth to 30 to 30 growth June June June June 2000 1999 2000 1999 £m £m £m £m United Kingdom Individual pensions 479 360 33% 80 67 19% Group pensions 312 193 62% 45 32 41% Mortgage - - - 19 26 (27%) Annuities 420 401 5% - - - Bonds and savings 1,660 1,334 24% 3 3 - Other life 95 45 111% 35 23 52% PEPs/ISAs/unit 510 464 10% 11 8 38% trusts/OEICS ------ ------ ------ ------ ------ ------ 3,476 2,797 24% 193 159 21% France AFER (excluding unit- 363 351 14% - - - linked) Unit-linked & other 540 288 106% 8 9 (3%) savings Protection business 65 76 (6%) 13 16 (6%) ------ ------ ------ ------ ------ ------ 968 715 49% 21 25 (5%) Ireland Life 164 112 61% 7 3 140% Pensions & annuities 34 13 177% 18 7 184% ------ ------ ------ ------ ------ ------ 198 125 74% 25 10 170% Netherlands Individual pensions 116 41 210% - - - Group pensions 50 88 (39%) 9 9 12% Life 37 38 9% 23 29 (15%) ------ ------ ------ ------ ------ ------ 203 167 33% 32 38 (8%) Poland Life & savings 5 6 (8%) 22 32 (27%) Pensions - - - 109 2 5,699% ------ ------ ------ ------ ------ ------ 5 6 (8%) 131 34 312% Spain Life & savings 32 9 294% 4 4 28% Pensions 5 5 13% 1 4 (79%) ------ ------ ------ ------ ------ ------ 37 14 197% 5 8 (29%) Other Europe Life & pensions 183 693 (71%) 42 64 (28%) UCITS and other 121 57 114% - - - ------ ------ ------ ------ ------ ------ 304 750 (56%) 42 64 (28%) International Life & pensions 228 223 2% 23 22 5% Unit trusts 166 144 18% - - - ------ ------ ------ ------ ------ ------ 394 367 8% 23 22 5% ------ ------ ------ ------ ------ ------ Total long-term 5,585 4,941 17% 472 360 37% savings ====== ====== ====== ====== ====== ====== Analysis of UK long-term savings sales by distribution channel IFA - life and pensions 2,419 1,776 36% 138 116 19% products - investment products 360 333 8% 6 2 200% Partnerships/Direct - life and pensions 547 557 (2%) 44 35 26% products - investment products 150 131 15% 5 6 (17%) ------ ------ ------ ------ ------ ------ Total UK long-term 3,476 2,797 24% 193 159 21% savings ====== ====== ====== ====== ====== ======

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