CGNU plc 2000 Results - Pt 3

CGNU PLC 27 February 2001 CGNU plc 2000 Results CGNU plc Preliminary Announcement 2000 PART 3 Summarised consolidated profit and loss account - modified statutory basis For the year to 31 December 2000 Restated 2000 2000 1999 Em Premium income (after reinsurance) and £m £m investment sales Ongoing business 24,350 Life premiums 14,848 13,470 4,102 Investment sales 2,501 1,578 1,127 Health premiums 687 402 ------- ------- ------- 29,579 18,036 15,450 14,744 General insurance premiums 8,990 8,373 ======= ======= ======= 44,323 Total ongoing business 27,026 23,823 Businesses discontinued and to be discontinued General insurance premiums 4,954 - United States (to be discontinued) 3,021 2,621 315 - London Market (discontinued) 192 233 ------- ------- ------- 49,592 Total 30,239 26,677 ======= ======= ======= Operating profit 1,950 Modified statutory life profit 1,190 1,172 112 Health 68 24 100 Fund management 61 66 676 General insurance 412 459 (41) Non-insurance operations (25) (30) 2 Associated undertakings 1 10 (303) Corporate costs (185) (162) (592) Unallocated interest charges (361) (240) ------- ------- ------- 1,904 1,161 1,299 (218) Wealth management (133) - ------- ------- ------- Operating profit - ongoing business before tax, amortisation of goodwill, amortisation of acquired additional value of in-force 1,686 long-term business and exceptional items 1,028 1,299 Businesses discontinued and to be discontinued (902) United States general insurance (to be (550) 176 discontinued) (7) London Market (discontinued) (4) 25 ------- ------- ------- 777 474 1,500 (151) Amortisation of goodwill (92) (34) Amortisation of acquired additional value of (47) in-force long-term business (29) (22) (697) Exceptional items (425) (163) ------- ------- ------- (118) Operating (loss)/profit before tax (72) 1,281 423 Short-term fluctuation in investment returns 258 250 (44) Change in the equalisation provision (27) (55) Net profit/(loss) arising on the sale of 20 subsidiary undertakings 12 (8) Provision for loss on sale for businesses to be discontinued (1,755) - United States general insurance (1,070) - (735) Loss on withdrawal from London Market (448) - operations (97) Merger transaction costs (59) - ------- ------- ------- (2,306) (Loss)/profit on ordinary activities before (1,406) 1,468 tax (418) Tax on profit on ordinary activities (255) (382) ------- ------- ------- (2,724) (Loss)/profit on ordinary activities after (1,661) 1,086 tax (85) Minority interests (52) (66) ------- ------- ------- (2,809) (Loss)/profit for the financial year (1,713) 1,020 (28) Preference dividends (17) (17) ------- ------- ------- (Loss)/profit for the financial year (2,837) attributable to equity shareholders (1,730) 1,003 (1,402) Ordinary dividends (855) (773) ------- ------- ------- (4,239) Retained (loss)/profit transferred to (2,585) 230 reserves ======= ======= ======= -------------------------------------------------------------------- Earnings per share - modified statutory basis For the year to 31 December 2000 Restated 2000 1999 Operating profit before amortisation of goodwill, amortisation of acquired additional value of in-force long-term business and exceptional items, after taxation, attributable to equity shareholders in respect of ongoing business 28.3 p 39.2p (Loss)/profit attributable to equity shareholders (77.0)p 44.8p (Loss)/profit attributable to equity shareholders - (76.9)p 44.7p diluted Consolidated statement of total recognised gains and losses For the year to 31 December 2000 Restated 2000 1999 £m £m (Loss)/profit for the financial year (1,713) 1,020 Movement in internally-generated additional value of in-force long-term business* 73 909 Foreign exchange gains/(losses) 303 (389) ------- ------- Total recognised gains and losses arising in the year (1,337) 1,540 ======= ======= * Stated before the effect of foreign exchange movements which are reported within the foreign exchange gains/(losses) line. Reconciliation of movements in consolidated shareholders' funds For the year to 31 December 2000 Restated 2000 1999 £m £m Balance at 1 January As previously reported - CGU plc 9,567 9,039 - Norwich Union plc 6,039 5,713 Merger adjustments arising from alignment of accounting practices 67 141 ------- ------- Restated shareholders' funds at 1 January 15,673 14,893 Total recognised gains and losses arising in the year (1,337) 1,540 Dividends (872) (790) Increase in capital 54 23 Merger reserve arising during the year 5 8 Other movements 110 (1) ------- ------- Balance at 31 December 13,633 15,673 ======= ======= -------------------------------------------------------------------- Summarised consolidated balance sheet As at 31 December 2000 2000 1999 £m £m Assets Goodwill 747 452 ------- ------- Investments Land and buildings 820 763 Investments in Group undertakings and participating interests 264 283 Variable yield securities 5,868 7,595 Fixed interest securities 13,813 12,421 Mortgages and loans, net of non-recourse funding 1,233 1,080 Deposits 1,112 1,057 Additional value of in-force long-term business 6,605 6,425 ------- ------- 29,715 29,624 Reinsurers' share of technical provisions 3,709 2,638 Assets of the long-term business 148,551 140,798 Other assets 10,596 9,672 ------- ------- Total assets 193,318 183,184 ======= ======= Liabilities Shareholders' funds Equity 13,433 15,473 Non-equity 200 200 Minority interests 584 584 ------- ------- Total capital and reserves 14,217 16,257 Liabilities of the long-term business 144,301 136,673 General insurance liabilities 23,786 22,036 Borrowings 2,592 2,094 Other creditors and provisions 8,422 6,124 ------- ------- Total liabilities 193,318 183,184 ======= ======== -------------------------------------------------------------------- Consolidated cash flow statement For the year to 31 December 2000 Restated 2000 1999 £m £m Net cash inflow from operating activities excluding exceptional items and merger transaction costs 738 857 Exceptional items and merger transaction costs paid (251) (223) Net cash outflow from servicing of finance (257) (156) Corporation tax paid (including advance corporation tax) (210) (124) Net purchases of tangible fixed assets (119) (127) Acquisitions and disposals of subsidiary and associated undertakings (277) (64) Equity dividends paid (816) (731) Net cash inflow from financing activities 493 428 ------- ------- Net cash flows (699) (140) ======= ======= Cash flows were invested as follows: Increase in cash holdings 119 - Net portfolio investment Net (sales) of investments (1,541) (298) Non-trading cash flow to long-term business 723 158 operations ------- ------- Net investment of cash flows (699) (140) ======= ======= The cash flows presented in this statement relate to non-life transactions only. -------------------------------------------------------------------- 1. Merger of CGU plc and Norwich Union plc a) On 21 February 2000, CGU plc and Norwich Union plc announced plans to merge their respective businesses to form CGNU plc. The merger was effected by way of a scheme of arrangement of Norwich Union plc under section 425 of the Companies Act 1985. Under the terms of the scheme, Norwich Union shareholders had their existing shares replaced by new shares in CGNU plc. CGU shareholders' rights were unaffected. The merger became effective on 30 May 2000 and on that date 931 million new shares in CGNU plc, with a total market value of £9,528 million, were issued to Norwich Union plc shareholders in return for Norwich Union plc shares in a ratio of 48 CGNU plc shares for every 100 Norwich Union plc shares. The merger has been accounted for using the merger accounting principles set out in Financial Reporting Standard 6 'Acquisitions and Mergers'. Accordingly, the financial information for the current year has been presented, and that for prior years restated, as if CGU plc and Norwich Union plc had been combined throughout the current and comparative accounting periods. Merger accounting principles have given rise to a merger reserve. Costs of integrating and reorganising the business are included within operating profit. Merger transaction costs of £59 million have been incurred and are shown after operating profit within the profit on ordinary activities before taxation. b) The accounts have been prepared on the basis of the accounting policies used to prepare the CGU plc and Norwich Union plc 1999 Annual Report and Accounts, as modified to align differences in the accounting policies used by the two companies. The accounting policies aligned were such that: (i) Certain general business fixed income and debt securities held by Norwich Union plc were revalued from an amortised cost basis to a market value basis; (ii) Project costs which had formerly been capitalised by Norwich Union plc have been eliminated; (iii) Embedded value assumptions used by both companies have been brought onto a common basis. The impact of these changes was to increase profit before tax by £7 million (1999: reduce by £91 million) and increase shareholders' funds by £110 million (1999: increase by £67 million). 2. Basis of preparation a) The preliminary announcement for the year to 31 December 2000 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The results on a modified statutory basis for 2000 and 1999 have been taken from the Group's unaudited 2000 Report and Accounts. The auditors have reported on the 1999 accounts of CGU plc and Norwich Union plc; their reports were unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The CGU plc and Norwich Union plc 1999 Report and Accounts have been filed with the Registrar of Companies. b) 'Business discontinued' represents a material discrete operation where the Group has completed the sale of its operations. 'Business discontinued' disclosures relate solely to the exit from London Market business. 'Business to be discontinued' represents a material discrete operation where sales contracts have been exchanged with a prospective purchaser but all conditions of sale have not been achieved, and sales proceeds have not yet been received by the Group. 'Business to be discontinued' disclosures relate solely to the general insurance business in the United States. The results of all other operations are entitled 'Ongoing business'. They do not incorporate the use of the expected proceeds from business sold or sales of business to be completed. In instances where the carrying value of businesses to be disposed of is less than the likely sales proceeds, a provision for loss on sale has been included in the results. -------------------------------------------------------------------- 3. Exchange rates The principal rates of exchange used for translation are: Average rates 2000 1999 Canada - dollars 2.25 2.40 France - francs 10.76 9.99 Netherlands - guilders 3.62 3.35 United States - dollars 1.51 1.62 Closing rates 31 December 31 December 2000 1999 Canada - dollars 2.24 2.34 France - francs 10.44 10.55 Netherlands - guilders 3.51 3.54 United States - dollars 1.49 1.61 The profit and loss account and balance sheet have been translated into euros using the average rate of 1 euro = £0.61 (1999: 1 euro = £0.66) and the closing rate of 1 euro = £0.63 (1999: 1 euro = £0.62) respectively. 4. Change in accounting policy - dividend income Financial Reporting Standard 16 'Current Tax' was published by the Accounting Standards Board on 16 December 1999, following changes in the United Kingdom tax system. The principal requirement of this standard is that dividends should be recognised at the amount receivable without any attributable tax credit. In presenting the results for the year to 31 December 2000, the CGNU plc Group has complied with FRS16. Norwich Union plc adopted FRS16 in its 1999 accounts. Accordingly, dividend income within the comparative results for the year to 31 December 1999 for CGU plc only has been restated to a net of tax basis. UITF abstract 14 'Disclosure of Changes in Accounting Policy' requires the effect of changes in accounting policy to be disclosed in relation to both the reported results in 2000 and 1999. The change in accounting policy has a purely presentational effect and does not alter the profit of the Group after taxation. Accordingly, shareholders' reserves at 31 December 2000 and 31 December 1999 remain at the same level before and after the change in accounting for dividend income. The impact of the change in accounting policy on operating profit before taxation is a reduction of £6 million (1999: £15 million). The impact on profit on ordinary activities before tax is a reduction of £32 million (1999: £19 million). -------------------------------------------------------------------- 5. Acquisitions and disposals a) Acquisitions On 18 January 2000, the Group acquired the remaining 73.7% of the share capital of Hibernian Group plc, formerly an associate of CGU plc, for a cash consideration of £254 million giving rise to goodwill of £122 million. Hibernian Group plc transacts general insurance in the Republic of Ireland and the United Kingdom, life insurance business in the Republic of Ireland and international reinsurance. The transaction was accounted for as an acquisition. Compliance with Financial Reporting Standard 2 'accounting for subsidiary undertakings' requires a departure from the Companies Act 1985 relating to the calculation of goodwill on Hibernian. In the opinion of the directors, in order to give a true and fair view, goodwill has to take account of the share of net assets purchased when Hibernian became an associate. If the provisions of the Companies Act had been followed, goodwill would have been £47 million lower. On 31 July 2000, the Group entered into a bancassurance partnership with Bancaja, a leading savings bank in Spain. As part of this alliance, the Group purchased 50% of the issued share capital of Aseval, Bancaja's life insurance subsidiary, for a cash consideration of £205 million (including transaction costs), with further amounts payable if Aseval achieves certain performance targets. The Group's share of Aseval's embedded value amounted to £47 million, giving rise to goodwill of £193 million after taking into account the estimated value of the deferred consideration. The transaction has been accounted for as an acquisition and, in view of the management control exercised by the Group, the results of Aseval have been consolidated with those of other Group operations from the date of the purchase. During December 2000 the Group acquired the minority interest in CU Hayat Sigorta in Turkey and CGU Underwriting Limited, giving rise to goodwill of £43 million. b) Investment in associates On 5 December 2000, the Group acquired 49.99% of the ordinary share capital of RBS Life Investments Limited, the immediate holding company of Royal Scottish Assurance plc and National Westminister Life Assurance Limited, for a consideration of £600 million, representing assets acquired of £343 million and goodwill of £257 million. The investment is in the form of a £1 million 49.99% equity participation in RBS Life Investments Limited and a £599 million loan to RBS Life Holdings Limited, the company holding the remaining 50.01% of the ordinary shares in RBS Life Investments Limited. The loan is interest free, which would become repayable if RBS Life Investments Limited disposed of its investments in Royal Scottish Assurance plc and National Westminster Life Assurance Limited, and is guaranteed by The Royal Bank of Scotland plc. The National Westminister Life Assurance Limited element of the transaction is subject to ratification by The Royal Bank of Scotland plc shareholders at their Annual General Meeting on 11 April 2001. If ratification of the transaction is not forthcoming then full ownership of National Westminster Life Assurance Limited will revert back to The Royal Bank of Scotland plc and the attaching element of the consideration, plus interest, will become repayable to CGNU. No ratification is required for the Royal Scottish Assurance plc element of the transaction. c) Disposals On 31 July 2000, the Group disposed of its wholly-owned German general insurance business, General Accident Versicherungs AG. The cash consideration for the transaction was £34 million which incorporates adjustments following the completion accounts process. Net assets at the date of the disposal amounted to £27 million. Under the terms of the sale, the Group has retained some exposure to certain types of run-off losses and is currently in the process of securing reinsurance for the residual risk. A loss on disposal of £43 million has been recorded after allowing for transaction costs and the likely cost of reinsurance and after writing back £31 million of goodwill previously written off against reserves. During July 2000, the Group disposed of its 50.1% holding of First Australian Property Group Holdings Pty Limited ('Paladin') for a consideration of £16 million. The net assets disposed of, comprising unamortised goodwill, amounted to £12 million, generating a profit on disposal of £4 million. In October 2000, the Group disposed of its 51% holding in its South African general insurance business, CGU Holdings Limited, for a cash consideration of £58 million. The net assets disposed of amounted to £57 million and the loss on disposal, after transaction costs and writing back £8 million of goodwill previously charged to reserves, was £11 million. In November 2000, the Group disposed of its wholly-owned Polish businesses, PTE Norwich Union S.A. and Norwich Union Towarzystwo Ubezpieczen na Zycie S.A., for a cash consideration of £133 million, subject to any adjustments arising from the completion accounts process. Net assets at disposal amounted to £57 million, resulting in a profit on disposal of £65 million, after allowing for transaction costs. In December 2000, the Group completed the sale of Marlborough Underwriting Agency Limited, its wholly-owned Lloyd's managing agency, to the Berkshire Hathaway Group for a consideration of £5 million. Under the terms of the agreement, the Berkshire Hathaway Group has also replaced CGNU as the provider of capacity to the Marlborough-managed syndicates. This agreement brings to an end the Group's involvement in the London Market. Reinsurance has also been purchased from the Berkshire Hathaway Group to secure protection against any adverse impact of the run-off of claims reserves held by CGNU in respect of business written prior to exit, both in the respect of historic business through the ILU and other London Market operations, and, more recently, Lloyd's. This provides cover of £1 billion in excess of CGNU's claims reserves of £1.2 billion. The charge for withdrawal from London Market operations of £448 million includes the cost of the associated reinsurance protection. -------------------------------------------------------------------- 5. Acquisitions and disposals (continued) c) Disposals (continued) During the course of 2000, the Group entered into binding agreements to dispose of its life operations in Canada and stockbroking operations in the United Kingdom. In addition, the Group announced its intention to dispose of its life operations in Greece and part of its general business operations in New Zealand. These disposals were not completed by 31 December 2000. d) Business to be discontinued - United States general insurance The Group has entered into an agreement to sell its US general insurance operations for US$2,063 million and, in addition, an inter-company loan of US$1,100 million will be repaid to the Group. The settlement will comprise cash, the transfer of businesses to be retained and subordinated loan notes of US$260 million. This sale is subject to the satisfaction of certain conditions, including US regulatory approval, and is expected to be completed later in 2001. Subject to the satisfaction of certain conditions: - The total proceeds for the sale of the US general business of US$3,163 million were fixed by reference to the operation's net assets as at 31 August 2000 and will not be adjusted to reflect the business' results in the period from 1 September 2000 to completion; and - The Group will not bear any continuing operating risk from 31 August 2000 nor provide any guarantees in respect of its claims reserves or balance sheet beyond this date. Consequently, had the transaction been completed on 31 August, the post-tax loss on sale would have been US$2,007 million. Financial Reporting Standard 2 'Accounting for subsidiary undertakings' requires the results of the US general business to be consolidated with those of the Group's ongoing operations until the completion of the transaction. However, given that, subject to completion, the Group has retained no economic interest in the operations of this business beyond 31 August 2000, the US general business' post-tax operating loss and investment gains incorporated in the Group's consolidated profit and loss account from 1 September 2000 to completion will be offset by a corresponding change to the loss on sale calculated at 31 August 2000. The loss on sale recorded in these financial statements also reflects goodwill previously written off against reserves but which needs to be reinstated and charged to the profit and loss account. The after-tax provision for the loss on the sale, including pre-closing adjustments of US$200 million (£134 million), recorded in the Group's consolidated profit and loss account at 31 December 2000 is US$1,477 million or £989 million retranslated at the exchange rate prevailing at 31 December 2000. The calculation of the loss is summarised below: Exchange rate £m US$ m $:£ Net assets at 31 December 1999 3,133 5,050 1.6117 Exchange rate movements 248 1.4938 ------- 3,381 Capital injection 134 200 Actual operating profit/(loss) and investment gains/(losses) 1 January - 31 August 136 203 1 September - 31 December (559) (835) ------- ------- 3,092 4,618 ======= ======= Proceeds 2,117 3,163 1.4938 Less: Net assets to which proceeds apply (3,092) (4,618) Less: Transaction costs (25) (38) ------- ------- Provision for loss on sale before tax and goodwill write back (1,000) (1,493) Goodwill write back (70) (105) ------- ------- Pre-tax provision for loss on sale (1,070) (1,598) Tax attributed to loss on sale 81 121 ------- ------- Provision for loss on sale after tax and goodwill write back (989) (1,477) ======= ======= -------------------------------------------------------------------- 5. Acquisitions and disposals (continued) d) Business to be discontinued - United States general insurance (continued) The final accounting loss on completion will differ from the post-tax loss of £989 million above. This is due to the consolidation of profits or losses of this business from 1 January 2001 to the date of completion, despite there being no economic effect on the Group, and fluctuations in the $:£ exchange rate. The Group's consolidated profit and loss account and balance sheet incorporate the following financial information in respect of the US general insurance business: Abridged statement of operating and investment Full year Full year gains 2000 1999 £m £m Underwriting result (967) (204) Longer term investment return 417 380 ------- ------- General insurance operating (loss)/profit (550) 176 Unallocated interest charges* (42) (45) ------- ------- Operating (loss)/profit (592) 131 Amortisation of goodwill (3) (3) Exceptional items - (32) Short-term fluctuation in investment returns 66 (237) ------- ------- Loss on ordinary activities before tax (529) (141) Tax on loss on ordinary activities 110 34 ------- ------- Loss for the financial period (419) (107) Retranslation to closing rate (4) (1) ------- ------- Retained losses (423) (108) ======= ======= * Unallocated interest charges are eliminated at Group level. Analysis of investments 31 December 31 December 2000 1999 £m £m Land and buildings 76 69 Variable yield securities 539 1,538 Fixed interest securities 5,221 3,933 Mortgages and loans 1 1 Deposits - 5 ------- ------- 5,837 5,546 ======= ======= 6. Exceptional items Exceptional items comprise: 2000 1999 £m £m Merger integration costs 425 120 Integration incentive plans - 31 Other integration costs - 12 ------- ------- 425 163 ======= ======= Merger integration costs comprise the costs of integrating and reorganising the businesses of the former CGU plc and Norwich Union plc. For 1999, these relate to the businesses of the former Commercial Union and General Accident. The 1999 figures for integration incentive plans, which related to the integration of the former Commercial Union and General Accident businesses, comprised the costs of incentive plans payable to staff in certain business units and the costs of cash and share awards to senior management of the Group, which were conditional upon the performance of the Group against pre-defined targets. Other integration costs relate to the integration of the long-term business of Norwich Union's Spanish operation with its acquisition of British Life in 1999. -------------------------------------------------------------------- 7. Geographical analysis of life and pensions and investment sales - new business and total income Premium income New business sales (after reinsurance) and investment sales New single New regular premiums premiums Restated 2000 1999 2000 1999 2000 1999 £m £m £m £m £m £m Life and pensions sales United Kingdom 6,254 5,110 354 310 8,548 7,405 Europe (excluding UK) France 1,821 1,469 40 42 2,124 2,420 Ireland 383 325 41 19 539 375 Netherlands 463 340 73 84 1,030 837 Poland - Life 10 13 42 57 247 216 - Pensions - - 139 319 371 118 Spain 336 42 23 13 428 104 Other 399 886 125 110 890 1,348 International 467 454 53 45 671 647 ------- ------- ------- ------- ------- ------- Total life and pensions 10,133 8,639 890 999 14,848 13,470 Investment sales United Kingdom 877 795 20 12 897 807 Netherlands 1,025 230 - - 1,025 230 Europe (excluding UK) 284 130 - - 284 130 International 295 411 - - 295 411 ------- ------- ------- ------- ------- ------- Total long-term business 12,614 10,205 910 1,011 17,349 15,048 ======= ======= ======= ======= ======= ======= Single premiums are those relating to products issued by the Group, which provide for the payment of one premium only. Regular premiums are those where there is a contractual obligation to pay on an ongoing basis. -------------------------------------------------------------------- 8. Geographical analysis of modified statutory life profit 2000 1999 £m £m United Kingdom With-profit 275 244 Non-profit 497 556 Europe (excluding UK) France 143 103 Ireland 45 47 Netherlands 159 140 Poland - Life 31 31 - Pensions (9) (28) Spain 14 11 Other (1) 22 International 36 46 ------- ------- Total modified statutory life profit 1,190 1,172 ======= ======= 9. Geographical analysis of health premiums after reinsurance and operating result a) Premiums after reinsurance: 2000 1999 £m £m United Kingdom 204 177 France 92 97 Netherlands 391 128 ------- ------- 687 402 ======= ======= b) Operating result: Operating Underwriting profit result 2000 1999 2000 1999 £m £m £m £m United Kingdom 6 - 2 (4) France 12 13 - 2 Netherlands* 50 11 (22) (3) ------- ------- ------- ------- 68 24 (20) (5) ======= ======= ======= ======= * The basis for allocating the longer-term investment return between general business and health business has been refined in 2000 and is based on underlying technical and associated solvency assets. The effect of this refinement has been to reclassify £26 million of longer-term investment return from general insurance into health. The 1999 figures have not been restated. -------------------------------------------------------------------- 10. Geographical analysis of general insurance premiums after reinsurance and operating result a) General insurance premiums after reinsurance: 2000 1999 £m £m United Kingdom 4,937 4,635 Europe (excluding UK) France 640 657 Ireland 382 151 Netherlands 465 339 Other 625 659 International Australia and New Zealand 634 674 Canada 940 788 Other 367 470 ------- ------- Ongoing business 8,990 8,373 Businesses discontinued and to be discontinued United States 3,021 2,621 London Market 192 233 ------- ------- 12,203 11,227 ======= ======= b) Operating result: General Underwriting insurance result* operating profit* 2000 1999 2000 1999 £m £m £m £m United Kingdom 296 290 (387) (284) Europe (excluding UK) France (115) (8) (208) (80) Ireland 21 15 (30) (5) Netherlands** (4) 7 (40) (32) Other 20 22 (55) (52) International Australia and New Zealand 82 15 (7) (57) Canada 78 93 (53) (25) Other 34 25 (41) (58) ------- ------- ------- ------- Ongoing business 412 459 (821) (593) Businesses discontinued and to be discontinued United States (550) 176 (967) (204) London Market (4) 25 (59) (44) ------- ------- ------- ------- (142) 660 (1,847) (841) ======= ======= ======= ======= * The general insurance operating profit and underwriting result are stated before the change in the equalisation provision of £27 million (1999: £55 million). ** The basis for allocating the longer-term investment return between general business and health business has been refined in 2000 and is based on underlying technical and associated solvency assets. The effect of this refinement has been to reclassify £26 million of longer-term investment return from general insurance into health. The 1999 figures have not been restated. -------------------------------------------------------------------- 11. Taxation The tax charge in the profit and loss account comprises: 2000 1999 £m £m United Kingdom corporation tax (65) 32 Overseas tax 49 62 Other (103) (42) ------- ------- Total taxation charge for the period (119) 52 Tax attributable to the long-term business technical result 374 330 ------- ------- Charge to profit and loss account 255 382 ======= ======= Tax charge analysed between: Operating profit before tax, amortisation of goodwill, amortisation of acquired additional value of in-force long-term business and exceptional items - ongoing business 326 349 - businesses discontinued and to be discontinued (130) (13) Profit on other ordinary activities 59 46 ------- ------- 255 382 ======= ======= 12. Dividends a) The preference dividends payable in the profit and loss account comprise: 2000 1999 £m £m Preference dividends 17 17 ======= ======= The preference dividends are in respect of the cumulative irredeemable preference shares of £1 each in issue. b) The ordinary dividends in the profit and loss account comprise: 2000 1999 £m £m Ordinary dividends Interim - 14.25 pence (1999: 12.34 pence*) 320 278 Final - 23.75 pence (1999: 21.96 pence*) 535 495 ------- ------- Total ordinary dividends 855 773 ======= ======= * Based on the weighted average dividends per share of CGU plc and Norwich Union plc. The 1999 interim and final dividends per share for CGU plc were 14.25p and 23.75p respectively. Irish shareholders who are due to be paid a final dividend denominated in Irish punts will receive a payment based upon the exchange rate prevailing on 26 February 2001. MORE TO FOLLOW

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