CGNU - Bancassurance in Spain

CGNU PLC
31 July 2001

                                                        
                                                                31 July 2001


     CGNU AGREES THIRD BANCASSURANCE PARTNERSHIP IN SPAIN


CGNU plc ('CGNU') announces that it has agreed to form a bancassurance 
partnership with Caixa Galicia, Spain's fifth largest savings bank1. This is 
a further step in securing a leading position in the Spanish long term savings
market, where bancassurance accounts for over 80% of new business sales.  
As part of this partnership CGNU will take management control and acquire 50% 
of the issued equity share capital of Bia Galicia, Caixa Galicia's life and 
pensions subsidiary.
 
The agreement with Caixa Galicia is CGNU's third bancassurance partnership 
in Spain. It follows the acquisition of 50% of Bancaja's  long-term savings 
business, Aseval, in July 2000, and the agreement reached in June 2001 to  
acquire 50% of Unicorp Vida, the life and pensions operations of Unicaja. 
The three partnerships give CGNU access to the fourth largest banking  
network in Spain, with almost 2,500  branches and a client base of 6.7 
million customers. The partnership with Caixa Galicia gives CGNU a further 
opportunity to build on its position as the fifth-largest provider in the  
Spanish life insurance market2 where it has a 4% market share.

Like Bancaja and Unicaja, Caixa Galicia is the market leader in its home 
region, Galicia (northwestern Spain), where 69% of its  650  branches are 
located and where it enjoys a market share of 28%.3 Caixa Galicia also has  
branches throughout Spain.

The resulting combined nationwide network has an excellent geographic fit  
and will give CGNU a strong and balanced presence in the Spanish 
bancassurance market with particular strength in the regions of Galicia  
(northwest), Valencia (southeast), and Andalusia (south), which together 
account for 35% of the Spanish population.

As with the Bancaja and Unicaja partnerships, this new venture will benefit 
from CGNU's international expertise in long-term savings.  It will also 
utilise CGNU's efficient bancassurance platform, Aseval, to service the 
operations of Bia Galicia.  This will allow CGNU and its partners to realise 
economies of scale, further reducing unit costs in what is already one of 
the most efficient operators in the Spanish life and pensions market.

The initial consideration for CGNU's 50% shareholding in Bia Galicia is 
£89m4 payable in cash, with further amounts payable if Bia Galicia achieves 
agreed performance targets. The price paid  reflects the potential of the 
Caixa Galicia network, as the life and pensions business of Caixa Galicia  
is in its early stages of development. CGNU, through Bia Galicia, will
have access to Caixa Galicia's network of 650 branches and 2.3 million  
customers for the distribution of life insurance and pension products.

The transaction is subject to regulatory approval and is expected to 
complete before the end of September 2001.



Tony Wyand, Group Executive Director, with responsibility for CGNU's 
continental European operations, said:

'We are delighted to join with Caixa Galicia in a new bancassurance agreement 
in Spain. The transaction represents another step in creating a strong 
nationwide bancassurance network that will benefit from the efficient 
operating platform that CGNU already has in the Spanish market.  CGNU,
together with its partners, now has a significant presence in this fast 
growing and profitable long term savings market.

By putting together CGNU's expertise in long term savings, both 
internationally and in Spain, and Caixa Galicia's distribution capabilities, 
there is the potential for both partners to generate significant value for 
their stakeholders.'

Jose Luis Mendez, CEO of Caixa Galicia, said:

'The alliance reached with CGNU, one of the largest insurers in  Europe,  
is an important step for Caixa Galicia with the partners enjoying common 
objectives. We are confident that the alliance will be profitable for both 
parties.

Caixa Galicia has, for some time, recognised the importance of long term 
savings in fulfilling our client needs and improving customer loyalty to 
our company. Our partnership with CGNU will provide a boost to this 
strategically important business line that will contribute to Caixa Galicia 
in the years to come.'

Enquiries:

Analysts / Investors:
Steve  Riley, Investor Relations Director           +44  (0)20 7662 8115

Media:
Hayley  Stimpson, Director of External Affairs      +44  (0)20 7662 7544
Alex  Child-Villiers, Financial Dynamics            +44  (0)20 7269 7107



_______________________________  
1  As measured by total assets as at December 2000
2  As measured by 2000 life gross written premiums
3  As measured by deposits
4  Figures translated at £1 = Ptas 271
     

             
                            Notes to Editors

CGNU in Spain
 
Following the merger of CGU and Norwich Union to form CGNU, the operations of 
both companies in Spain have been merged into Plus Ultra, the former 
subsidiary of Norwich Union in Spain.  Plus Ultra has been operating in the 
Spanish insurance market for over 100 years, and has nationwide coverage 
through a network of more than 6,000 agents and 96 branches.  Additionally,  
CGNU is present in the bancassurance market through the acquisition of 50% 
of Bancaja's long term savings business, Aseval, in July 2000. An agreement 
was also reached in June 2001 to acquire 50% of Unicorp Vida, the life and
pensions operations of Unicaja. Total CGNU pro forma life and pensions   
premiums in Spain in 2000 were £601 million (including Aseval for the full 
12 months, but excluding the recently  announced transaction with Unicaja), 
of which £141 million and £460 million were generated by Plus Ultra and
Aseval respectively.

Bancaja transaction

In July 2000, CGNU acquired management control and a 50% shareholding in 
Aseval, the life and pensions subsidiary of Bancaja, the fourth largest 
savings bank ('caja') in Spain by total assets.  Through this partnership, 
CGNU gained access to Spanish bancassurance, the dominant distribution channel
in this market, accounting for more than 80% of new business sales.
 
The consideration paid by CGNU was £205 million with further potential 
payments dependent upon future performance.
 
Unicaja transaction

In June 2001, CGNU announced its partnership in life insurance and pensions 
with Unicaja, Spain's ninth largest savings bank by total assets which has a 
dominant position in southern Spain (Andalusia).  The transaction was similar 
to the Bancaja partnership, with CGNU gaining management control and a 50%
shareholding of Unicaja's life insurance and pensions subsidiaries, Unicorp  
Vida and Ahorro Andaluz respectively (referred to jointly as 'Unicorp Vida').

The consideration was £92 million with further amounts payable if Unicorp 
Vida achieves its business performance targets.

Caixa Galicia description
 
Caixa Galicia is the product of six mergers of local savings banks, which 
began in 1978 with the merger of the former Caja de Ahorros de La Coruna y 
Lugo and Caja El Ferrol.  The remaining mergers took place between 1980 and  
1992 and involved two savings banks and three 'cajas rurales' (rural co-
operative banks).  With the exception of Caja Rural de Leon, which is also 
in the north-west of Spain, the entities were based in the region of Galicia.

Caixa Galicia is Spain's fifth-largest caja and  the  tenth-largest banking  
group by total assets as at December 2000.  Although it is present in all the 

Spanish regions, its operations are largely centred in the region of Galicia
(northwest of Spain). Caixa Galicia is the largest financial group in its home
region, where 69 % of its 650 branches are located.
Total life premium income in 2000 was £13 million and in 1999 £53 million 
(source: UNESPA).

Geographic fit of Caixa Galicia, Unicaja and Bancaja distribution networks

The combined network of 2,490 branches has an excellent geographic fit and 
nationwide coverage, with a significant presence in the regions of Galicia 
(northwest) 446 branches, Valencia (southeast) 846 branches, Andalusia (south)
662 branches, and Madrid 127 branches.
  
The Spanish life insurance and pensions market 

The Spanish life insurance and pensions market is one of the fastest growing
in Europe. Recent growth has been driven by declining interest rates,
regulatory changes allowing companies to externalise company pension schemes
to insurance companies, and the considerable migration from traditional
deposits and savings accounts towards investment funds, life insurance and
pension schemes. The latter tendency has  been driven  by  the  public's
growing awareness of the need to complement State pensions and welfare
benefits with individual private provisions.

The Spanish life insurance market grew by 40% in 2000 while the pensions 
market increased 19% in local currency (Deutsche Bank Research).