Trading Statement

Chesnara PLC
30 June 2004

For Immediate Release 30th June 2004

Chesnara plc ('Chesnara' or 'the Group')








Impact of ABI Revised Mortgage Endowment Code and new FSA rules





On 25th May 2004 the Association of British Insurers issued their Revised
Mortgage Endowment Code. At the same time the Financial Services Authority
issued new rules on endowment complaint time barring as part of Handbook Notice
33.



Since that time Chesnara has sought clarification from both organisations on
these newly introduced rules. Whilst there are still some points that require
clarification it is now clear to the Board that the introduction of these new
rules will necessitate further strengthening of the mortgage endowment
misselling provision. This is likely to have a material effect on expected
profits for the half year, with a consequent reduction in the Embedded Value.
This strengthening does not affect the emergence of surplus from the underlying
business and the Board continues to target a dividend payment of £10m for the
full year, with 40% payable in respect of the half year.



The Board's intention is to update investors on this issue at the time of
publication of its half-year results, which is currently scheduled for Monday
August 16th.





ENDS



For further information contact:

Graham Kettleborough, Chief Executive, Chesnara plc        [phone]



Serra Balls, Cubitt Consulting                             [phone]





Notes:



Countrywide Assured plc ('CAplc'), the principal operating subsidiary of
Chesnara plc, was established in 1988 as the life assurance division of
Countrywide Assured Group selling mortgage-related life assurance products
through Countrywide Assured Group's financial services division.  In August
2003, CAplc was substantially closed to new business following the
implementation of a distribution agreement between Countrywide Assured Group's
financial services division and Friends Provident. This agreement was
established in August 2002 following Countrywide Assured Group's decision to
switch new business from CAplc to Friends Provident. In 1995, CAplc acquired
Premium Life, a life assurance company, and integrated it into its existing
operations.  Chesnara's primary subsidiary CAplc manages an existing book of
life assurance policies, personal pensions and long-term care products; it
continues to service its existing clients and markets Guaranteed Income and
Guaranteed Growth Bonds. Chesnara is based in Preston and employs approximately
195 people. It administers approximately 230,000 policies, most of which are
either non-linked term assurance, unit-linked endowment policies and guaranteed
bonds.  On 25th May 2004 Chesnara was listed on the London Stock Exchange.


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