NU plans GBP250M cost savings

Aviva PLC
14 September 2006




News release



14 September 2006





AVIVA'S UK OPERATION, NORWICH UNION, PLANS £250 MILLION COST SAVINGS



Aviva plc ('Aviva') announces that its UK business Norwich Union plans to reduce
duplication and improve efficiency to deliver annual cost savings of £250
million in 2008 at a cost of £250 million by the end of 2007.



The savings and costs will be evenly spread between the Life and General
Insurance businesses and in the Life business, our expectation is that it will
principally benefit shareholders. These initiatives will further strengthen the
group's ability to meet its current financial objectives and deliver growth for
shareholders. The savings are in addition to the planned RAC integration savings
of £130 million per annum by 2008.



Aviva's headcount in the UK of 36,000 will reduce by 4,000 by 2008 with up to
1,000 roles being offshored to India (in line with previous announcements that
7,800 roles will be located offshore by the end of 2007) and a further 500 roles
being outsourced to third party IT suppliers. The company will seek to minimise
the number of compulsory redundancies through natural staff turnover and
voluntary measures. The savings primarily arise from cost efficiencies and
reducing duplication in marketing, human resources, finance, and information
technology, as well as applying a single approach to procurement and supplier
management.



Continuous improvement in service standards and maintenance of strong financial
disciplines will remain key objectives throughout the process.



The announcement follows a review of the Norwich Union insurance businesses and
is in response to a combination of changing distribution dynamics in the
insurance industry and changes in the use of technology.  An update on Norwich
Union's UK Life strategy will be presented on 26 October to analysts and
investors.



Patrick Snowball, Norwich Union executive chairman, commented:



'We have to ensure that Norwich Union remains a highly efficient and effective
company in what is an increasingly competitive and dynamic environment.
Customers' buying habits are changing rapidly as technology becomes more
accessible. Already half our new direct motor insurance policies are purchased
over the internet.  Consumers, IFAs and brokers are increasingly operating in a
self-service world.



'Norwich Union, with its strong and trusted UK market brand will continue to
lead the industry by adapting to these shifting dynamics. We will do this by
leveraging the scale of our Life and General Insurance businesses and we have a
proven record of delivering change.



'The integration and efficiency measures we are announcing today are part of a
programme which will result in an increase in customer focus across our UK
businesses along with better and more efficient use of technology.'



                                    - ends -



Enquiries:



Analysts:

Charles Barrows, investor relations director, Aviva plc     [phone]
Jessie Burrows, head of investor relations, Aviva plc       [phone]



Media:

Hayley Stimpson, director of external affairs, Aviva plc    [phone]
Sue Winston, head of group media relations, Aviva plc       [phone]
Rob Bailhache, Financial Dynamics                           [phone]





Notes to editors:



•                         The £250 million of annualised cost savings represents
approximately 10% of our current operating cost base on continuing operations,
after adjusting for the planned cost savings from integrating the operations of
RAC with those of Norwich Union Insurance.  It is anticipated that approximately
£200 million of these savings will be reported in the 2007 income statement with
the full £250 million being reported to profits in 2008.



•                         Aviva plc is the world's fifth-largest insurance group
and the UK's largest insurance services provider (based on gross worldwide
premiums at 31 December 2005), and is one of the leading providers of life and
pension products to Europe, with substantial positions in other markets around
the world.



•                         Aviva's principal business activities are long-term
savings, fund management and general insurance, with worldwide total sales of
£36 billion and assets under management of £322 billion at 31 December 2005.



•                         The Aviva media centre at www.aviva.com/media includes
images, logos, company and product information and a news release archive.


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