CGU Q1 2000 Life New Business

CGU PLC
26 April 2000
 
                                   CGU plc                                    
                   WORLDWIDE LIFE AND SAVINGS NEW BUSINESS
                           FIRST 3 MONTHS OF 2000

  * Total worldwide new business sales of £1.9bn with life and pensions sales
    up 19% at £1,712m (APE* up 43%).

  * New annual premiums up 79% to £190m, including £77m from Polish
    pensions.

  * Single premium sales 14% higher at £1,522m.

  * ISA, unit trust and UCITS sales were lower at £172m, following the
    rush to purchase PEPs in the first quarter last year.

*APE (annual premium equivalent) is total new annual premiums plus 10% of new
single premiums and investment products.

Bob Scott, Group Chief Executive, commented:


'Our strong portfolio of UK and Continental European businesses made good
progress  in the first quarter, with total sales of £1.9bn and life and 
pensions new business up 19%.   UK life and pensions sales were up 24%, 
benefiting from our strong with-profits performance and good growth in 
pensions business.  We have also significantly expanded our distribution 
power through new distribution agreements with  RBS NatWest,  and  more  
recently  with  Tesco.   France  produced  an  excellent performance with 
sales up 64% and we continued to benefit from our success in Polish pensions, 
having captured around 30% of pension funds under management in the 
privatised market.

Our merger with Norwich Union received strong support from shareholders and
is  expected to be completed by early June 2000, creating the UK's second
largest life business and the fifth largest in Europe.'

Enquiries:
Media:  
Robbie Graham, Director of Life Development    [phone]

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

UK Trade Press:  
Fran Elliott, Public Relations Manager         01904 452 172
                                               07968 934035 (mobile)



                   New single       New annual        Investment      
                    premiums         premiums          sales (ii)      TOTAL
                                                            
                                                      
                          Local             Local            Local     Local
               3 mths  currency   3 mths currency  3 mths currency  currency
                 2000    growth     2000   growth    2000   growth    growth
                   £m         %       £m        %      £m       %          %
                                                    
                                                            
United Kingdom     749       24       46       28     104     (60)         -  
France             466       64        4       29                         64
Netherlands        109       32       15      (13)                        25
Italy               59      (77)       1      (90)                       (77)
Poland - life        3       24       12      (24)                       (17) 
Poland - pensions    -      n/a       77       n/a                       n/a
Germany             14      (69)      12       95                        (49) 
Other Europe        72      180       10      264      68     138        163
Rest of World       50       20       13       16                         19
                 -----      ----    ------   -----   -----   -----     ------ 
TOTAL            1,522       14      190       79     172     (40)         9
                 -----      ----    ------   -----   -----   -----     ------
                 

Notes:  (i)  Average exchange rates used.
       (ii)  Includes ISAs, unit trusts and UCITS (collective investments sold

             throughout Europe and Asia).


UK :  CGU Life is a top 3 life insurer for total new business, with a market
share of around 5%.  In addition to our multi-distribution capability through
IFAs, building societies, estate agents and direct, we have significantly
expanded our distribution power through new deals with RBS NatWest and Tesco.
The Royal Bank of Scotland and National Westminister Bank provide a network
of some 2,000 branches. CGU will manufacture the products and invest the
funds under management in the joint venture.  As part of the deal, CGU plans
to acquire 50% stakes in the Royal Bank of Scotland's life insurance
subsidiary, Royal Scottish Assurance and also in NatWest Life.  Discussions
are expected to reach a conclusion in the coming months following due
diligence.  In addition, we are now the exclusive supplier of life and
pension products to Tesco Personal Finance, which has over 1.4m customers.
ISA and life protection products will be sold initially, building a wider
range of pension and investment products during the year.

CGU Life's new life and pensions sales were 24% higher at £795m. This
reflected strong Portfolio bond and pension sales, benefiting from the
strength of our with-profits performance.   Investment sales were lower
following buoyant PEP sales in the first quarter of 1999.

New  annual  premiums increased by 28% to £46m, reflecting good  pension  and
protection   sales.     Our  strong  pension  performance,  with  individual
pension sales up 39% to £19m and group pension business 23% higher at  £12m,
lays the foundation for a successful entry into the stakeholder market.   The
recent  government  decision  to  allow with-profits  funds  for  stakeholder
pensions  will  benefit the group.  Life protection sales  increased  to  £9m
(1999  £4m) and we began selling term assurance over the Internet  in  March.
Mortgage  endowments sales of £6m (1999 £8m) were lower reflecting the  trend
of recent quarters.


New  single  life  premiums increased by 24% to £749m, boosted  by  excellent
sales  of our flagship investment product, the Portfolio Bond, which were  up
36%  to  £534m despite increased competition in this market.  Single  premium
pensions were in line with last year at £192m (1999 £196m).  This included  a
31%  increase to £127m in individual pension business, offset by lower  group
pension sales.

CGU Life was a major beneficiary of the increase in Personal Equity Plan
activity last year ahead of the transition into Individual Savings Accounts
('ISAs') in April 1999.  In the first quarter of 2000 new ISA and unit trust
sales were 60% lower at £104m, reflecting both the strong first quarter last
year and a move into technology investments, away from income producing
products.


France :  CGU France produced an excellent first quarter performance, well
ahead of the market.  New single premiums, which dominate the market,
increased by 64% against market growth of some 50%.  AFER bond sales of £207m
were 39% higher, benefiting from its position as the largest savings
organisation in France with over 500,000 members and the strong investment
yield of 6.23% in 1999.

Sales of SFER, the unit-linked product of AFER, also increased strongly and
represented 30% of total AFER sales in the first quarter.  Unit-linked sales
(including £89m in unit-linked AFER sales) and other savings products more
than doubled to £223m, reflecting increasing consumer interest in equity-
linked products following the strong performance of the French stock market
during 1999 and the prevailing low interest rate environment.  Group
protection sales were in line with last year at £36m due to our focus on
selective underwriting.


Netherlands  :  Delta Lloyd Nuts Ohra is the third largest life and  pensions
insurer in the Netherlands, with a market share of around 6%.  Single premium
sales  were  up  32%  at £109m, boosted by the inclusion  of  £20m  from  the
acquisition of Nuts Ohra and increased individual pensions sales.  For annual
premiums, sales of our universal life product, Delta Life, increased  by  27%
to  £3m, and group pensions of £5m were 13% higher.  We reduced sales of less
profitable protection products and overall, new annual premiums of £15m were
13% lower.


Italy  :   Bancassurance now accounts for around 60% of  life  sales  in  the
Italian market and we are seeking to build on our bancassurance distribution.
Our  partnership with Banca delle Marche, which sells through  a  250  branch
network,  is  developing well, with £71m in single premium  sales  since  its
launch  in  September 1999, including £16m in the first quarter  (1999  nil).
Sales  from  Banca  Popolare di Lodi were at a similar level  to  last  year,
adding £3m in single premiums and £1m in new annual premiums.

Overall,  single and annual premiums were lower at £59m and £1m respectively,
following  the  ending of our bancassurance agreement with  Credito  Italiano
last year.


Poland  :   In  Poland, we are the market leader for private pensions  having
captured  over  20% of the market by number of customers and  around  30%  by
funds under management.  We now have a customer base in excess of 3 million,
providing future cross-selling opportunities.  Over 60% of our  new  pension
customers  are aged 30 or under.  With a normal retirement age of  65  across
the population,  pension  savings will generate substantial long term
investment, producing rapid growth in funds under management.  We established
a fund management business last year to manage these funds and to compete for
third party mandates.

Delays  in redirecting pension payments from the state system meant that  our
pensions  success  in  1999 continued to benefit new business  in  the  first
quarter  of 2000.  New annual pension premiums of £77m were received.   Along
with  the  £282m of annual pension premiums received in 1999, this represents
the  processing  of  2  million cases, with a further 300,000  cases  in  the
pipeline.

We are starting to win new pension customers as they enter the market.  In
the first quarter, we attracted a further 26,000 new pension cases, with the
premiums to be processed in the second quarter.

CU Polska increased its share of the life market to 20% in 1999, up from 18%.
First  quarter  2000 life sales were lower, however, following  the  market's
focus  on  pension business last year.  There has been some movement  towards
single premium business as personal assets grow and single premium life sales
were  24%  higher at £3m with annual premiums 24% lower at £12m.   Long  term
growth  prospects  remain very good, with only around  2  million out of  a
possible 15 million employed people having an individual life policy.


Germany  :  Berlinische Leben achieved a 95% increase in new annual  premiums
to  £12m, reflecting our increased focus on annual premium business.  Single
premiums  were  ahead of the fourth quarter of 1999 at £14m, but were lower
than the exceptional sales of £51m in the first quarter of 1999.


Ireland :  The completion of the Hibernian acquisition was effective from 1
January  2000.   Single premium investment bond sales doubled to  £50m  (1999
£25m),  including  £26m from Hibernian.  This partly reflected the successful
launch of a new bond product and the buoyant Irish economy.   New  annual
premiums were £7m (1999 nil), including £6m from Hibernian, reflecting good
pensions sales.


Turkey  presents  a new pensions opportunity, with a Bill supporting  private
pensions currently before parliament.  Our Turkish business is gearing up for
this opportunity and we hope to be one of the first companies to be granted a
pensions licence later this year.  Our life business, CU Hayat Sigorta, ranks
fourth  largest  in  the  market for new business and  continues  to  develop
strongly.  Annual premium sales doubled to £6m with strong growth in sales of
unit-linked  products from a growing salesforce of 660, a 50%  increase  over
the  same  period  last year.  Our cross-border life business  in  Luxembourg
achieved  £5m  in  single premiums and sales of UCITS (collective  investment
schemes)  increased by 138% to £68m, reflecting growth through  institutional
clients.


In  the  United  States, single premium sales were 23% higher at  £40m,  with
strong  sales of deferred annuity products and improved demand for  immediate
annuities.  Following withdrawal from  unprofitable group health business in
1999,  annual premiums were 24% lower at £5m.  In Canada, single premiums of
£10m were up 10%, reflecting good sales of our segregated funds products, and
new annual premiums were in line with last year at £2m.


ASSET MANAGEMENT

CGU is one of the top 20 fund managers in Europe, managing worldwide assets
of around £135bn.

Morley Fund Management in the UK and Victoire Asset Management in France both
won industry awards in 1999, enhancing the group's fund management
reputation.  Delta Lloyd Nuts Ohra is one of the largest asset managers in
the Netherlands.  Ohra, part of the Nuts Ohra acquisition, has outperformed
all other domestic asset managers over the last five years and is selling
increasing business via the Internet.  In the UK, strong long term investment
performance continues with our third party pension fund ranking in the top
quartile over the last 5 years.




NOTES TO EDITORS


On  21 February 2000, CGU and Norwich Union announced a proposed merger
of  the  two  groups.   This was approved by both CGU and Norwich Union
shareholders  at Extraordinary General Meetings on 31 March 2000 and the
proposed merger is expected to be completed by early June 2000.

CGNU  will  be  the  largest insurance group in the UK  with  worldwide
premium income and retail investment sales of £26bn and will be a top 5
European life insurer based on premium income.

The  geographical  split  of  CGU's total  life,  pensions  and  retail
investment sales for the 12 months to 31 March 2000 was:
   
                         %
      United Kingdom    49
      France            21
      Netherlands        6
      Italy              8
      Poland             6
      Other Europe       6
      Rest of World      4
                       ---
                       100
                       ---


Distribution of CGU's UK life and savings products using APE  (annual
premium equivalent is total new annual premiums plus 10% of new single
premiums and investment products) for the first quarter of  2000
was:

                           %
      IFAs                69
      Partnership/Direct  31
                         ---
                         100
                         ---


All growth rates are quoted in local currency.

CGU's 3 months 2000 results will be reported on 10 May 2000.

Results and corporate news releases are available on the Internet:
www.cgugroup.com/group



       Worldwide life & savings new business - first 3 months of 2000


                   New single            New annual        Investment sales 
                    premiums              premiums                (ii)
                              Local                 Local                Local
                 3 months  currency   3 months   currency   3 months  currency
                2000  1999   growth  2000  1999    growth  2000   1999  growth
                  £m    £m        %    £m    £m         %    £m     £m       %

United Kingdom
Individual 
pensions         127    97       31    19    14        39
Group pensions    65    99      (34)   12    10        23
Mortgage           -     -        -     6     8       (22)
Other life       557   409       36     9     4        93
ISAs/PEPs
/unit trusts       -     -        -     -     -         -   104    259    (60)
                ----  ----     ----   ---   ---       ---  ----   ----   -----
                 749   605       24    46    36        28   104    259    (60)

France
AFER (excl. 
unit-linked)     207   168       39     -     -         -
Unit-linked 
& other savings  223   112      124     4     4        29
Group protection 
business          36    39        3     -     -         -    
                ----  ----      ---    --    --       ---   
                 466   319       64     4     4        29

Netherlands (iii)
Individual 
pensions          64    18      289     -     -         -
Group pensions    23    53      (50)    5     5        13
Universal life     3     4       (4)    3     3        27
Other individual 
life              15    13       18     5    10       (55)
Group life         4     4       18     2     1       103
                ----   ---      ---   ---   ---      -----
                 109    92       32    15    19       (13)

Italy
Unit-linked       49   249      (78)    -     6       (95)
Savings, protection 
& other           10    34      (66)    1     10      (87)
                 ---  ----     -----   --    ---     -----
                  59   283      (77)    1     16      (90)
Poland
Life & savings     3     3       24    12     16      (24)
Pensions           -     -        -    77      -      n/a
                  --    --      ---   ---    ---     ----
                   3     3       24    89     16      486

Germany
Life & savings     8     9       (4)    6      4       87
Pensions & 
annuities          6    42      (83)    6      3      103
                 ---   ---     -----  ---     --     ----
                  14    51      (69)   12      7       95

Other Europe
Life & 
pensions (iv)     72    29      180    10      3      264
UCITS              -     -        -     -      -        -      68    29   138
                 ---   ---     ----   ---     --     ----     ---   ---  ---- 
                  72    29      180    10      3      264      68    29   138

United States
Life assurance     1     2      (35)    2      3      (43)
Pensions & 
annuities         39    30       27     3      3       (4)
                 ---   ---      ---    --     --     -----
                  40    32       23     5      6      (24)
               
Other             10     8       11     8      5       69
               ----- -----      ---  ----   ----      ---     ---   ---  ----
TOTAL          1,522 1,422       14   190    112       79     172   288  (40)
               ----- -----      ---  ----   ----      ---     ---   ---  ---- 
    

Notes:   (i)   Average exchange rates used.
        (ii)   2000 figures include ISAs, unit trusts and UCITS (collective 
               investments sold throughout Europe and Asia).  1999 figures 
               included PEP sales in the UK (PEPs were replaced by ISAs in 
               April 1999).
       (iii)   Figures  include £20m in single premiums and £0.4m in  annual
               premiums from Nuts Ohra.
        (iv)   Figures include £26m in single premiums and £6m in annual 
               premiums from Hibernian.