Sale of US General Ins Bus

CGNU PLC
25 September 2000


SALE OF US GENERAL INSURANCE BUSINESS

The Board of CGNU announces that the Group has entered into
a definitive agreement (the 'Agreement') to sell its
interest in its US general insurance operations (the 'US
General Business') to White Mountains Insurance Group, Ltd.
('White Mountains') for $2,063 million (£1,415 million). In
addition, an inter-company loan of $1,100 million (£754
million) will be repaid to the Group through a combination
of $470 million (£322 million) in cash and the transfer to
CGNU of certain assets not related to the operations of the
US General Business (the 'Retained Businesses') with a value
of $630 million (£432 million).  The Retained Businesses are
currently held by CGU Corporation, which is the Group's US
holding company, and its affiliates.  The Retained
Businesses consist of Pilot, a Canadian general insurance
company, the Group's US life insurance operations and a
European listed investment.

Had the Transaction completed on 31 August 2000, the post-
tax loss on sale would have been £1,376 million. Subject to
completion of the Transaction, the Group will not bear any
continuing operating risk or exposure to the US General
Business or provide any guarantees in respect of its claims
reserves or balance sheet from 31 August 2000.  There will
be no price adjustment to reflect the US General Business's
results in the period between 1 September 2000 and
completion.

Bob Scott, Group Chief Executive of CGNU, commented:
'Whilst the Group will be incurring a significant loss, we
have achieved a clean-cut exit from the difficult operating
environment of the US property and casualty market.  The
Transaction marks a major step in the repositioning of CGNU
as a leading European-based financial services group focused
on the long term savings markets and the achievement of
superior returns from selected general insurance markets.'


Strategic Background

CGNU's strategy is to achieve profitable growth in its long-
term savings and asset management businesses, take a focused
approach to general insurance, build top 5 positions in each
of its chosen markets and withdraw from lines of business or
markets that do not offer the potential for market leadership 
or superior returns.

At the time of the merger of CGU plc and Norwich Union plc
(the 'Merger'), the Group concluded that, due to the
difficult conditions in the US property and casualty market
and the requirement for substantial investment to achieve a
leading market position, it was in the best interests of the
Group and its shareholders to withdraw from the US general
insurance market.  The Transaction will result in a
rebalancing of CGNU's business towards the faster growing
and less volatile life and asset accumulation sectors.
Following the Transaction, the long term savings and asset 
management activities will account for approximately 
60 per cent. of the Group's net written premiums and 
approximately 76 per cent. of operating profits on a pro forma 
basis for the six months ended 30 June 2000.


The Transaction

Under the terms of the Agreement, which was concluded
following an extensive and competitive sale process, White
Mountains will purchase the entire equity share capital of
CGU Corporation for a total of $2,063 million (£1,415
million) plus the repayment of an inter-company loan of
$1,100 million (£754 million) through a combination of $470
million (£322 million) in cash and the transfer to CGNU of
the Retained Businesses valued at $630 million (£432
million).

Excluding the value of the Retained Businesses, the
consideration of $2,533 million (£1,737 million) payable on
completion will be satisfied by cash of $2,323 million
(£1,593 million) and by way of a $210 million (£144 million)
six month subordinated note repayable at maturity either in
cash or ordinary White Mountains stock at White Mountains'
option.  Any stock consideration shall not exceed 9.9 per
cent. of White Mountains' issued share capital, with any
balance payable in cash.  In the event that CGNU receives
White Mountains stock, it is anticipated that CGNU will sell
down its stake in an orderly manner.

Subject to completion of the Transaction and beyond
customary representations and warranties, the Group will not
bear any continuing operating risk or exposure to the US
General Business or provide any guarantees in respect of its
claims reserves or balance sheet from 31 August 2000. There
will be no price adjustment to reflect the US General
Business's results in the period between 1 September 2000
and completion.

The Board is satisfied that, having followed an extensive
and competitive sale process, the best possible price has
been achieved, in particular when the clean-cut exit and the
uncertainties of long-tail liabilities are taken into
account. The benefits to shareholders of the Transaction
will be a repositioning of the Group's business towards the
long term savings markets and an improvement in the quality
of the Group's earnings.

The Transaction, which is subject to the satisfaction of
conditions including US regulatory approval, is expected to
complete around the end of the year.


CGNU's Retained Businesses

CGU Corporation currently owns the operations of Pilot, a
general insurer in Canada, which together with CGNU's other
Canadian operations make CGNU the largest property and
casualty insurer in the country, with total premium income
of £788 million in 1999. CGU Corporation also owns CGULICA,
the Group's US life business with a developing position in
bancassurance, which reported total premium income of £243
million in 1999.  The Group will retain these businesses by
acquiring them, along with a European listed investment,
from CGU Corporation for $630 million (£432 million)
satisfied by the reduction from $1,100 million (£754
million) to $470 million (£322 million) of an inter-company
loan from the Group to CGU Corporation.


Financial Effects of the Transaction

The Group's total interest in its US general insurance
business at 31 December 1999, as stated in the circular to
CGU shareholders issued in February 2000 in connection with
the Merger, was $4,563 million (£2,831 million).  This
number did not include the value of Pilot or CGULICA.
Including these businesses, the figure would have been
$5,063 million (£3,141 million) and as at 31 August 2000 the
equivalent figure was $5,253 million (£3,602 million).   Had
the Transaction been completed on 31 August 2000 at its
value of $3,163 million (£2,169 million), the sale would
have resulted in an estimated loss of £1,376 million post-
tax (£1,459 million pre-tax) after taking into account
incidental costs.   A provision will be made in CGNU's
results for the 9 months ending 30 September 2000 (see Note
1).

The US General Business is expected to be treated as a
discontinued operation in CGNU's accounts for the year
ending 31 December 2000.   The US General Business reported
an operating profit before tax of $285 million (£176
million) for the year ended 31 December 1999 (1998: $229
million / £138 million).


Use of Proceeds

CGNU's net cash proceeds resulting from the Transaction,
after taking into account the acquisition from CGU
Corporation of the Retained Businesses, the repayment of the
$210 million (£144 million) note issued by White Mountains
and incidental costs, will be $2,495 million (£1,711
million).  CGNU has reviewed its capital position in the
light of the sale and believes that the proceeds from the
disposal can be used most effectively within the business to
finance the growth of its life and savings operations.

CGNU was advised by Goldman, Sachs & Co. in connection with
the Transaction.


ENQUIRIES:

CGNU plc

Mr Bob Scott
Group Chief Executive           [phone]

Mr Peter Foster
Group Finance Director               [phone]

Mr Steve Riley
Investor Relations Director          [phone]


MEDIA ENQUIRIES:

Mr Alex Child-Villiers
Financial Dynamics              [phone]



Additional Information

Information on the US General Business

The US General Business's operations are headquartered in
Boston, Massachusetts and consist of a group of companies
operating throughout the USA, concentrating on small
commercial accounts, personal lines and specialty products.
The US General Business ranks amongst the top 20 in the US
and is a national, multi-line property and casualty insurer
that writes exclusively through independent agents.  The US
General Business operates in 50 states, has over 7,000
employees and a distribution network consisting of more than
6,000 independent agents.  In the year ended 31 December
1999, the US General Business reported total premiums from
continuing operations of $4.2 billion (£2.6 billion) (1998:
$4.1 billion / £2.5 billion).


Information on White Mountains

White Mountains is publicly traded on the New York Stock
Exchange under the symbol WTM and had a market
capitalisation of $1.0 billion (£0.7 billion) as at 22
September 2000. The company's principal businesses are
conducted through its subsidiaries and its affiliates in the
business of property-casualty insurance and reinsurance.

White Mountains will finance the Transaction through a
combination of assets on hand, a committed bank facility and
capital from equity investors including Berkshire Hathaway.



Note 1

The accounting loss on sale reported in the financial
statements up to completion will differ from the post-tax
loss of £1,376 million above.  This is due to:

*  the write-back of goodwill previously written-off
*  profits or losses of the US General Business from 
   1 September 2000 to the date of completion despite there 
   being no economic effect on CGNU

*  fluctuations in the $:£ exchange rate

A provision will be made for the expected loss on sale in
the Group's results for the 9 months ending 30 September 2000.



Note 2

The following exchange rates have been used to convert
dollar amounts into pounds sterling throughout this
announcement:

*  Balances as at 31 December 1999: $1.6117 = £1

*  All other balances: $1.4583 = £1 (exchange rate as at 
   22 September 2000)

*  Earnings and losses for the calendar year 1999:
   average rate of $1.62 = £1

*  Earnings and losses for the calendar year 1998:
   average rate of $1.66 = £1