CGNU PLC Q1 2001 Results-Pt 4

CGNU PLC
3 May 2001

PART 4 OF 5


Page 26

11.  Earnings per share

a)   Basic earnings per share

                                     3 months 2001         3 months 2000    
                                     -------------         -------------    
                                         Net of               Net of        
                                           tax,                 tax,        
                                     minorities           minorities        
                                            and                  and        
                             Before  preference     Per   preference     Per
                                tax    dividend   share     dividend   share
                                 £m          £m       p           £m       p
Operating profit -                                                          
 ongoing business                                                           
 before amortisation of                                                     
 goodwill, amortisation                                                     
 of acquired additional                                                     
 value of in-force                                                          
 long-term business and                                                     
 exceptional items              310         194     8.6          197     8.8
                                                                            
Adjusted for the                                                            
 following items:                                                           
- operating profit/(loss)                                                   
  on business to be                                                         
  discontinued                   27          18     0.8           62     2.8
                                                                            
- operating profit/(loss)                                                   
  on discontinued                                                           
  business                        -           -       -            6     0.2
                                                                            
- amortisation of                                                           
  goodwill                     (14)        (14)   (0.6)          (9)   (0.4)
                                                                            
- amortisation of acquired                                                  
  additional value of                                                       
  in-force long-term                                                        
  business                      (9)         (6)   (0.3)          (1)       -
                                                                            
- exceptional items               -           -       -            -       -
                                                                            
- short-term fluctuation                                                    
  in investment returns       (284)       (357)  (15.9)           41     1.8
                                                                            
- change in the                                                             
  equalisation provision       (13)         (9)   (0.4)          (4)   (0.2)
                                                                            
- net profit arising on the                                                 
  sale of subsidiary                                                        
  undertakings                  125         105     4.7            -       -
                                                                            
- provision for loss on                                                     
  business to be                                                            
  discontinued                   13          13     0.6            -       -
                                                                            
- loss on withdrawal                                                        
  from London Market                                                        
  operations                      -           -       -            -       -
                                                                            
- merger transaction                                                        
  costs                           -           -       -            -       -
                                                                            
                             ------      ------  ------       ------  ------
Profit/(loss)                                                               
attributable                                                                
to equity shareholders          155        (56)   (2.5)          292    13.0
                             ======      ======  ======       ======  ======

                                                          Full year 2000
                                                             Net of         
                                                               tax,         
                                                         minorities         
                                                                and         
                                                         preference      Per
                                                           dividend    share
                                                                 £m        p
Operating profit - ongoing business                                         
 before amortisation of goodwill,                                           
 amortisation of acquired additional                                        
 value of in-force long-term business                                       
 and exceptional items                                          636     28.3

Adjusted for the following items:                                           
- operating profit/(loss) on business                                       
  to be discontinued                                          (420)   (18.7)

- operating profit/(loss) on discontinued                                   
  business                                                      (3)    (0.1)

- amortisation of goodwill                                     (92)    (4.1)

- amortisation of acquired additional value                                 
  of in-force long-term business                               (22)    (1.0)

- exceptional items                                           (352)   (15.7)

- short-term fluctuation in investment                                      
  returns                                                     (117)    (5.2)

- change in the equalisation provision                         (19)    (0.8)

- net profit arising on the sale of                                         
  subsidiary undertakings                                        12      0.5

- provision for loss on business                                            
  to be discontinued                                          (989)   (44.0)

- loss on withdrawal from London Market                                     
  operations                                                  (314)   (14.0)

- merger transaction costs                                     (50)    (2.2)

                                                            -------  -------
Profit/(loss) attributable to equity 
 shareholders                                               (1,730)   (77.0)
                                                            =======  =======


Earnings per share has been calculated based on the operating profit from
ongoing business before amortisation of goodwill, amortisation of acquired
additional value of in-force long-term business and exceptional items, after
taxation, attributable to equity shareholders, as well as on the profit
attributable to equity shareholders, as the directors believe the former
earnings per share figure provides a better indication of operating
performance. The calculation of basic earnings per share uses a weighted
average of 2,251 million (three months to 31 March 2000: 2,242 million, full
year 2000: 2,247 million) ordinary shares in issue.

The actual number of shares in issue at 31 March 2001 was 2,251 million 
(31 March 2000: 2,243 million, 31 December 2000: 2,251 million).

b)   Diluted earnings per share

                                    3 months 2001           3 months 2000
                              -------------------------   ------------------
                                       Weighted             Weighted        
                                        average              average        
                                      number of     Per    number of     Per
                              Total      shares   share       shares   share
                                 £m           m       p           m        p
                                                                            
(Loss)/profit attributable                                                  
 to equity shareholders        (56)       2,251   (2.5)        2,242    13.0
Dilutive effect of                                                          
 options                          -           3       -            3       -
                             ------      ------  ------       ------  ------
Diluted earnings               (56)       2,254   (2.5)        2,245    13.0
                             ======      ======  ======       ======  ======

                                       
                                                             Full year 2000
                                                            Weighted        
                                                             average        
                                                              number     Per
                                                           of shares   share
                                                                   m       p
                                                                            
Profit/(loss) attributable                                                  
 to equity shareholders                                        2,247  (77.0)
Dilutive effect of                                                          
 options                                                           4     0.1
                                                              ------  ------
Diluted earnings                                               2,251  (76.9)
                                                              ======  ======
--------------------------------------------------------------------


Page 27

12.  Longer-term investment return



The longer-term investment return is calculated separately for each principal
general insurance business and certain long-term operations. In respect of
equities and properties, the return is calculated by multiplying the opening
market value of the investments, adjusted for sales and purchases during the
period, by the longer-term rate of investment return. The longer-term rate of
investment return is determined using consistent assumptions between
operations, having regard to local economic and market forecasts of investment
return. The allocated longer-term return for other investments is the actual
interest income receivable for the period.

The principal assumptions underlying the calculation of the longer-term
investment return are:



                                           Longer-term rates of return   
                                                                         
                                          Equities            Properties
                                       2001      2000      2001      2000
                                          %         %         %         %
                                                                         
United Kingdom                         8.1%      8.1%      6.6%      6.6%
France                                 7.5%      7.5%      6.5%      6.5%
Ireland                                8.7%      8.7%      6.7%      6.7%
Netherlands                            8.4%      8.4%      6.5%      6.5%
Australia and New Zealand             10.0%     10.0%      8.0%      8.0%
Canada                                 9.3%      9.3%      7.3%      7.3%
United States                          9.3%      9.3%      7.3%      7.3%



END OF PART 4 OF 5


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