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 +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 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

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