CGNU plc New Business

CGNU PLC 17 January 2001 CGNU plc Worldwide long-term savings new business Year to 31 December 2000 17 January 2001 - Record level of sales in the UK and worldwide in the three months to 31 December 2000 - Full-year worldwide new business sales up by 24% to £13.5 billion - Total UK new business sales up by 21% to £7.5 billion - Strong growth achieved in major continental European businesses - Worldwide retail investment sales up 63% to £2.5 billion* * Including sales of retail investment products in the Netherlands reported for the first time of £1,025 million (1999: £230 million) Bob Scott, Group Chief Executive, commented: 'Excellent new business sales of £13.5 billion worldwide were achieved in 2000. This is an exceptional achievement when set in the context of the merger between CGU and Norwich Union and the integration of the respective businesses. 'Our UK business delivered outstanding figures, up 21% to £7.5 billion against the background of an anticipated flat market. Record sales in the fourth quarter follow the launch of the new Norwich Union brand in October and demonstrate the strength of the business, its people and product range. 'The Group's major continental European businesses also reported excellent results. Our French business, up 33% to £1.9 billion, capitalised on the growth in unit-linked sales. In Spain, sales rose by more than 600%, boosted by our new bancassurance partnership with Bancaja, Spain's fourth-largest savings bank. In the Netherlands we reported impressive growth in retail investment sales, up 381% to £1.0 billion. 'The strong sales performance was achieved in a year of major change where 'business as usual' remained a priority through the merger process. The initiatives we have taken to develop our business and build new distribution, position us for further progress in 2001.' Enquiries: Analysts/Investors: Philip Scott, Group Executive Director UK Life +44(0)19 0445 2827 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 ------------------------------------------------------------------------------ Page 2 Single Regular Total 12 12 months months to Local to Local Local 31 Dec currency 31 Dec currency currency 2000 growth 2000 growth growth £m £m Life and pensions United Kingdom 6,254 22% 354 14% 22% France 1,821 34% 40 4% 33% Netherlands 463 47% 73 (6%) 37% Ireland 383 26% 41 130% 32% Poland 10 (19%) 181 (51%) (50%) Spain 336 762% 23 89% 603% Other Europe 399 (51%) 125 18% (44%) International 467 2% 53 14% 3% ------ ------ ------ ------ ------ Total life and pensions 10,133 20% 890 (9%) 17% Investment sales United Kingdom 877 10% 20 67% 11% Netherlands 1,025 381% - - 381% Other Europe 284 136% - - 136% International 295 (25%) - - (25%) ------ ------ ------ ------ ------ Total investment sales 2,481 63% 20 67% 63% ------ ------ ------ ------ ------ Total long-term savings 12,614 27% 910 (8%) 24% ------ ------ ------ ------ ------ United Kingdom: Norwich Union has become the leading UK life company through strong organic growth in 2000 set against an anticipated flat overall market. Total UK new business sales increased by 21% to £7,505 million (1999: £6,227 million) and in annual premium equivalent terms sales were 19% higher at £1,087 million (1999: £913 million). The sales in 2000 demonstrate growing market share and the excellent performance of our UK life business during a period of merger integration. Sales in the discrete fourth quarter were up 16% over the equivalent period in 1999 to £1,969 million (discrete fourth quarter 1999: £1,694 million), returning a record level for a single quarter. The fourth quarter sales follow the launch of the new Norwich Union brand with over 50 new products in October 2000 and, supported by a strong advertising campaign, position the brand as the market leader going into 2001. Norwich Union is also the leading IFA provider. IFAs provide more than 75% of our UK long-term savings business, and we achieved an increase of 25% in new business through the IFA channel during 2000. New single premiums increased by 21% to £7,131 million (1999: £5,905 million) including strong performance in single premium bonds and savings sales, up 28% to £3,758 million (1999: £2,930 million). New regular premiums increased by 16% to £374 million (1999: £322 million), including an increase in term assurance sales to £40 million (1999: £18 million), where the company has recently re-priced its contracts, consolidating its position as the market leader. Mortgage business sales at £37 million (1999: £55 million) were down by 33%, reflecting the shift from mortgage endowment sales to mortgage protection. We will continue to be a high volume player in this market, focusing on mortgage protection business and the delivery of first-class value to customers. Total individual pension sales at £1,170 million (1999: £879 million) showed an increase of 33% over 1999, reflecting the continuing success of our pre-stakeholder products, while total group pension sales at £607 million (1999: £482 million) were up 26% over 1999. Stakeholder pensions remain a top priority for 2001. Norwich Union was the first pension provider to apply for registration and was in the first tranche of providers to become registered. The business of seeking to encourage employers to designate Norwich Union as the stakeholder provider for their workforce is showing significant progress and we remain confident of achieving a strong market position. ------------------------------------------------------------------------------ Page 3 Annuity single premium sales at £772 million (1999: £904 million) were 15% down on 1999 maintaining our policy of pricing annuities for profit as well as volume. With-profit annuity sales continued to show significant growth at £111 million, up from £66 million in 1999. Investment sales increased by 11% to £897 million (1999: £807 million) reflecting continued strong sales of Isas. Norwich Union operates on a multi-channel basis and over 75% of sales comes through IFAs. We aim to grow our commitment to the IFA channel and, at the same time, expand our partnership arrangements and invest in our salaried direct sales force and telesales operation. Our partnership with The Royal Bank of Scotland was announced earlier in the year and combines the market-leading life capability of Norwich Union in the UK with The Royal Bank of Scotland's distribution power in the retail market. We are confident that this alliance will provide the opportunity for further strong and innovative sales performance in the UK market. No sales from this partnership are included within the 2000 life new business figures. France: Strong growth continued into the fourth quarter and produced a significant increase in total new business sales over 1999 of 33% to £1,861 million (1999: £1,511 million), outperforming anticipated overall market growth of approximately 20%. The excellent performance in 2000 demonstrates the strength of the multi-distribution capability in CGNU's second-largest life business. Single premium new business, which dominates the French market, increased by 34% to £1,821 million (1999: £1,469 million). Total AFER sales increased by 29% over 1999, benefiting from its position as the largest savings organisation in France, having 540,000 members and £15 billion of funds under management. Policyholders' investment yield for 2000 of 6.14% will help to maintain our competitive position during 2001. Sales of SFER, the unit-linked element of the AFER contract, increased by 160% compared with 1999, and represented 32% of total AFER sales, reflecting the trend towards unit-linked products. Abeille vie business also performed strongly over the year, increasing sales by 37% to £845 million (1999: £664 million) capitalising on the growth in equity-linked products. Netherlands: Delta Lloyd Nuts Ohra has a market share of around 6%, making it the third-largest life and pensions insurer in the Netherlands. Single premium life and pensions sales were up 47% at £463 million (1999: £340 million), reflecting the inclusion of £85 million from the acquisition of Nuts Ohra and good individual pensions sales. Regular group pensions sales were up 8%, although total regular premium sales were slower due to a reduction in annual premium market volumes ahead of tax reforms. Delta Lloyd Nuts Ohra is one of the leading fund managers in the Netherlands. Ohra's award-winning fund performance has led to substantial growth in assets under management over the year and the Ohra Aandelenfonds maintained its lead in the fund performance rankings. Reported for the first time, Delta Lloyd Nuts Ohra achieved growth in retail investment sales of 381% to £1,025 million (1999: £230 million; pro forma 1999: £305 million when including a full year of sales from Ohra), accounting for approximately 20% of the market. Building on the success of the Delta Lloyd and Ohra investment businesses, we are planning to launch mutual funds into Germany and Belgium later in 2001. Ireland: The re-launch of the complete product range under the strong and established Hibernian brand was completed in October 2000. Total new business sales advanced by 32% to £424 million (1999: £344 million), consolidating our position as a top-five provider of life and pensions products. Total single premium sales increased 26% to £383 million (1999: £325 million), boosted by Hibernian, acquired in January 2000, together with strong sales of pensions and the Celebration Bond. Total regular premium sales grew strongly, up 130% to £41 million (1999: £19 million), principally reflecting the contribution from Hibernian and strong pension sales. ------------------------------------------------------------------------------ Page 4 Poland: CU Polska is the market leader for private pensions and individual life assurance. The comparison of CU Polska pensions new business sales is influenced by the one-off privatisation of pensions provision and exceptional concentration of sales in the second half of 1999. Sales of £123 million were achieved in 2000 compared with £282 million in the previous year. With a pension customer base in excess of 2.4 million and a market share of around 30% measured by assets under management, CU Polska continues to capture a significant share of new pension business, adding 100,000 new pension clients during 2000. The high level of life sales in the market in 1999 was largely driven by the interest in financial services generated by the pension reform and was not repeated in 2000. As a result, while maintaining a Polish life market share at around 20%, CU Polska's life sales were lower at £48 million (1999: £70 million). The sales figures for CU Polska exclude sales from the Norwich Union life and pensions businesses sold to Sampo Insurance Company plc in November 2000. The Norwich Union businesses contributed regular premiums of £16 million (1999: £37 million) from pensions sales and £4 million (1999: £nil) from life sales. Spain: Total new business sales, including sales from our bancassurance partnership with Bancaja, Spain's fourth-largest savings bank, increased significantly to £359 million (1999: £55 million). Our Bancaja partnership, completed at the end of July 2000, contributed £11 million of annual premium sales and £265 million of single premium new business sales, including £152 million from three large single premium corporate pension sales. Our other operations produced strong growth in unit-linked savings products, with single premium sales increasing 82% to £71 million (1999: £42 million), reflecting the continuing success of unit-linked savings and pension products, assisted by the distribution of these products through our direct sales force. We remain confident about the potential for developing our business in conjunction with Bancaja to strengthen our overall position as a top-10 provider of life and pensions products in Spain. Other Europe Italy: Our focus during 2000 has been on the development of new and existing distribution partnerships. Regular premium sales through our Banca Popolare di Lodi partnership increased strongly, up 59% to £7 million (1999: £5 million). This growth provides a solid base as preparations are finalised to expand distribution into the larger Banca Popolare di Lodi branch network, which will progressively allow exclusive access to over 1,200 branches. Single premium sales of unit-linked products through the 250 branches of Banca delle Marche, launched in September 1999, increased by 46% to £74 million (1999: £55 million). The comparison with 1999 total new business sales from our Other European businesses is influenced by the cessation of our exclusive agreement with Credito Italiano in 1999. Other businesses: Our Dublin-based offshore life and investment business, offering tax-efficient products to high net worth individuals, commenced trading late in the first quarter of 2000 and contributed an encouraging £105 million in single premium sales. In Luxembourg, sales of UCITS (collective investment schemes) reported a strong performance, up 136% to £284 million (1999: £130 million). Our German business reported annual premiums up 31% to £48 million (1999: £39 million) and single premiums of £49 million. In Turkey sales increased by 58% to £22 million (1999: £16 million) reflecting the expansion of our direct sales network. As a result, our market share has increased to 8% (1999: 3%), promoting the business into a top-five position well placed to benefit from the introduction of new private pension legislation expected in mid-2001. Encouraging progress is being made in Romania following the launch of the business in October 2000. In January 2001 we completed the acquisition of a majority shareholding in a Czech Republic pension fund which will complement our existing life operation and enable a wider range of products to be marketed. ------------------------------------------------------------------------------ Page 5 International: Sales from our Australian life and pensions business grew by 4% to £255 million (1999: £258 million) with the trend away from traditional life products. In the United States, single premium business increased 8% to £198 million (1999: £172 million), with regular premium sales of £20 million (1999: £20 million). Preparations are progressing well to implement our distribution agreement with Wells Fargo, the sixth-largest bank in the United States, providing access ultimately to 2,600 branches. In December 2000 we announced that we had entered into an agreement for the sale of our two Canadian life businesses, expected to complete in the first quarter this year. The Canadian businesses contributed £14 million (1999: £12 million) of regular premium business and £30 million (1999: £35 million) of single premium business. Navigator Sales from our Navigator fund of funds service in Australia continued its excellent growth record, up 36% to £824 million (1999: £633 million). Total funds under administration were £2.4 billion. The excellent growth reflected the successful launch of an expanded range of financial services and the market popularity of investment products. ------------------------------------------------------------------------------ Page 6 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 of the top-five life insurers in Europe with substantial positions in other markets around the world making it the world's sixth 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 2 October 2000, the combined life and pensions, retail fund and general insurance businesses in the UK operate under the Norwich Union brand, and the institutional investment business operates 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. 2000 1999 France - francs £1 = 10.76 £1 = 9.99 Netherlands - guilders £1 = 3.62 £1 = 3.35 Ireland - punts £1 = 1.29 £1 = 1.20 Poland - zloty £1 = 6.57 £1 = 6.44 Spain - pesetas £1 = 272.98 £1 = 252.84 4. All growth rates are quoted in local currency. 5. Annual premium equivalent (APE) is an UK 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 12 months to Local 31 Dec currency 2000 growth £m United Kingdom IFA 853 23% Partnerships/Direct 234 8% ------ ------ 1,087 19% France 222 27% Netherlands 222 70% Ireland 79 65% Poland 182 (51%) Spain 57 256% Other Europe 193 (3%) International 129 (2%) ------ ------ Total long-term savings 2,171 10% ====== ====== 6. Reported within the new business figures for the first time, Delta Lloyd Nuts Ohra achieved full-year retail investment sales of £1,025 million. The phasing of the sales during 2000 is as follows: Retail investment sales £m Cumulative 3 months ended 31 March 2000 371 Cumulative 6 months ended 30 June 2000 584 Cumulative 9 months ended 30 September 2000 813 Cumulative 12 months ended 31 December 2000 1,025 CGNU plc is a company registered in England No. 2468686. Registered office St Helen's 1 Undershaft London EC3P 3DQ ------------------------------------------------------------------------------ Page 7 Worldwide long-term savings new business Single 12 12 months months to to Local 31 Dec 31 Dec currency 2000 1999 growth £m £m United Kingdom Individual pensions 1,007 748 35% Group pensions 534 412 30% Mortgage - - - Annuities 772 904 (15%) Bonds and savings 3,758 2,930 28% Other life 183 116 58% Peps/Isas/unit trusts/Oeics 877 795 10% ------ ------ ------ 7,131 5,905 21% France AFER (excluding unit-linked) 690 712 4% Unit-linked & other savings 1,001 622 74% Protection business 130 135 3% ------ ------ ------ 1,821 1,469 34% Netherlands Individual pensions 215 89 162% Group pensions 178 174 10% Life 70 77 (2%) Unit trusts 1,025 230 381% ------ ------ ------ 1,488 570 182% Ireland Life 317 294 16% Pensions & annuities 66 31 130% ------ ------ ------ 383 325 26% Poland Life & savings 10 13 (19%) Pensions - - - ------ ------ ------ 10 13 (19%) Spain Life & savings 113 34 257% Pensions 223 8 2906% ------ ------ ------ 336 42 762% Other Europe Life & pensions 399 886 (51%) UCITS and other 284 130 136% ------ ------ ------ 683 1,016 (27%) International Life & pensions 467 454 2% Unit trusts 295 411 (25%) ------ ------ ------ 762 865 (10%) ------ ------ ------ Total long-term savings 12,614 10,205 27% ====== ====== ====== Including investment sales of 2,481 1,566 63% Regular 12 12 months months to to Local 31 Dec 31 Dec currency 2000 1999 growth £m £m United Kingdom Individual pensions 163 131 24% Group pensions 73 70 4% Mortgage 37 55 (33%) Annuities - - - Bonds and savings 5 6 (17%) Other life 76 48 58% Peps/Isas/unit trusts/Oeics 20 12 67% ------ ------ ------ 374 322 16% France AFER (excluding unit-linked) - - - Unit-linked & other savings 22 20 19% Protection business 18 22 (10%) ------ ------ ------ 40 42 4% Netherlands Individual pensions - - - Group pensions 23 23 8% Life 50 61 (12%) Unit trusts - - - ------ ------ ------ 73 84 (6%) Ireland Life 12 8 60% Pensions & annuities 29 11 185% ------ ------ ------ 41 19 130% Poland Life & savings 42 57 (24%) Pensions 139 319 (55%) ------ ------ ------ 181 376 (51%) Spain Life & savings 15 8 96% Pensions 8 5 77% ------ ------ ------ 23 13 89% Other Europe Life & pensions 125 110 18% UCITS and other - - - ------ ------ ------ 125 110 18% International Life & pensions 53 45 14% Unit trusts - - - ------ ------ ------ 53 45 14% ------ ------ ------ Total long-term savings 910 1,011 (8%) ====== ====== ====== Including investment sales of 20 12 67% Analysis of UK long-term savings sales by distribution channel IFA - life and pensions products 5,014 4,024 25% 274 235 17% - investment products 654 517 27% 12 6 100% Partnerships/Direct - life and pensions products 1,240 1,086 14% 80 75 7% - investment products 223 278 (20%) 8 6 33% ------ ------ ------ ------ ------ ------ Total UK long-term savings 7,131 5,905 21% 374 322 16% ====== ====== ====== ====== ====== ======

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