Re Agreement

CGNU PLC
27 June 2001


     

         CGNU EXPANDS BANCASSURANCE PRESENCE IN SPAIN

CGNU plc ('CGNU') announces that it has agreed the terms of a partnership in 
life insurance and pensions business with Unicaja, Spain's  eighth largest 
savings bank.1 This new bancassurance agreement builds on CGNU's existing 
partnership with Bancaja announced in May 2000 and has Bancaja's full
support and encouragement.

As part of the partnership agreement with Unicaja, CGNU will take management 
control and acquire 50% of the issued equity share capital of Unicaja's life  
insurance and pensions subsidiaries, Unicorp Vida and Ahorro Andaluz 
respectively (referred to jointly as 'Unicorp Vida').  Unicorp Vida has 
exclusive access to Unicaja's distribution network of 750 branches,  
allowing it to sell life and pensions products to Unicaja's approximately 
two million customers.

Unicaja's presence in long-term savings is in its early stages of development 
relative to other banking networks in Spain.  CGNU, through its partnership 
with Bancaja, already has an efficient operational platform that is achieving 
strong new business sales. The partnership between Unicaja and CGNU will
utilise  the  existing operational platform, further reducing unit costs.
   
CGNU, through its partnerships with Bancaja and Unicaja, will have access to 
some 1,840 branches, representing the third largest distribution network 
amongst Spanish savings banks and sixth largest amongst all Spanish financial 
institutions.  The branch networks of each bank are complementary; Unicaja's
banking business is concentrated in the south of Spain (Andalusia), with an 
18% share of the long-term deposits market in the region, and Bancaja's 
strength is in the south east of Spain (Valencia, Castellon, and Alicante 
provinces).
  
The agreed consideration for the 50% stake in Unicorp Vida is payable in loan 
notes with a principal value of £92 million (Ptas  25 billion), redeemable in 
the period to December 2006, with further amounts payable if Unicorp Vida 
achieves its business performance targets. The price reflects the distribution
potential of the Unicaja network.

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

Tony Wyand, CGNU's group executive director (continental Europe) commented:

'The savings banks are a dynamic growth sector in the Spanish market and we 
are delighted to join with Unicaja in this partnership.  It will build on our 
existing bancassurance relationship with Bancaja and is a further step 
towards becoming a major force in the Spanish long-term savings market. 
Unicorp Vida has significant growth potential and  has achieved  growth  
of over 70% per annum over the last five years.
  
The partnership between CGNU and Bancaja has already boosted CGNU to rank  
fifth in the Spanish life market, with a 4% market share.  This market share 
will strengthen as Unicorp Vida develops into a mature insurance franchise and
realises the distribution potential of Unicaja's network.'


Braulio Medel, President of Unicaja, said

'Following the successful integration of the various networks of Unicaja, 
the Unicaja group is in a privileged position to enter into a strategic 
alliance with an international partner such as CGNU, the largest insurer in 
the UK and the sixth world-wide.  Unicaja's bancassurance partnership with
CGNU in Spain will boost our ambitions in a strategic business for us.  The 
agreement will allow us to combine complementary forces and be beneficial for 
both parties.

'In line with Unicaja's strategy, the group has been increasingly promoting 
its insurance business in recent years.  This transaction represents an 
important strategic step that will enable us to rapidly increase our long-term
savings business.'

Enquiries:

Analysts / Investors:
Steve Riley, Investor Relations Director      [phone]

Media:
Hayley Stimpson, Director of External Affairs [phone]

Alex Child-Villiers, Financial Dynamics       [phone]



                       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 nation-wide coverage
through a network of more than 6,000 agents and 96 branches.  Additionally,  
CGNU is present in the bancassurance market through its alliance with Bancaja,
 
which includes a 50% shareholding in the latter's insurance company, Aseval.  
Total CGNU pro forma life and pensions premiums in Spain in 2000 were 
£601 million, 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 customer funds.  Through this partnership, 
CGNU gained access to Spanish bancassurance, the dominant distribution channel
in this insurance market, accounting for more than 80% of new business sales. 

The consideration paid by CGNU was £205m with further potential payments 
dependent upon future performance.

Unicaja description
  
Unicaja is the product of the merger in 1991 of five Andalusian savings banks.
 
It provides the core traditional financial services associated with a 'caja'  
(deposits and mortgage lending) and more sophisticated financial services
(investment funds, insurance, and pension products).   Unicaja
is the 12th largest Spanish banking group and the eighth largest 'caja'1 
while its distribution network is the 10th largest in the Spanish financial 
system.  It has a dominant competitive position in southern Spain (Andalusia) 
and, more importantly, an 18% market share of long-term deposits in the
region, which constitutes the target market for life insurance and pension 
products.

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 that have created significant tax incentives 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 with the pensions market

up by 19% in local currency (Deutsche Bank research).
_______________________________
Exchange rate:  £1:Ptas 273
1 As measured by customer loans as at December 2000