1st Quarter Life New Business

CGNU PLC 25 April 2002 CGNU plc Worldwide long-term savings new business Three months to 31 March 2002 25 April 2002 - Worldwide long-term new business sales up 10% to £629 million on an APE* basis - Worldwide life and pension sales of £598 million, up 13% on an APE* basis - Worldwide regular premium life and pension sales up 32% to £296 million - UK life and pension sales up 15% on an APE* basis to £339 million - Continental Europe life and pensions sales, up 6% at £220 million on an APE* basis - Strong growth in total worldwide bancassurance sales, up 90% at £540 million - Worldwide new business contribution at £137 million, with new business margin of 22.9% reflecting changes in product mix * Annual premium equivalent (APE) is the industry standard measure of new regular premiums and 10% of single premiums All growth rates are quoted at constant rates of exchange Richard Harvey, Group Chief Executive, commented: 'The Group achieved a 13% increase in worldwide life and pensions business, following the strong growth delivered in 2001. We have strengthened our leadership position in the UK with a 15% increase in life and pensions sales. Margins in the UK reflect expected changes in the product mix, while in Continental Europe the margin remains strong. 'Our bancassurance expertise is delivering strong sales in key markets around the world, with total sales up 90% to £540 million. Sales through our joint venture with The Royal Bank of Scotland Group increased by 157% to £216 million. These results demonstrate continued momentum as we build on the strong foundations laid in 2001. In Continental Europe we continue to demonstrate good growth in important long-term savings markets and are capitalising on our developing bancassurance partnerships in Spain and Italy.' Enquiries: Analysts/Investors: Philip Scott, Group Executive Director UK Life +44(0)20 7662 2264 James Matthews, Head of Investor Relations +44(0)20 7662 2137 Media: Hayley Stimpson, Director of External Affairs +44(0)20 7662 7544 Stuart Blackmore, Financial Dynamics +44(0)20 7269 7241 There will be a conference call today for wire services at 7:45am on +44(0)20 8240 8245. This conference call will be hosted by Philip Scott, Group Executive Director UK Life and Tony Wyand, Group Executive Director Continental Europe. There will be a conference call today for analysts and investors at 9:30am (UK time) on +44(0)20 8240 8240. This conference call will be hosted by Philip Scott, Group Executive Director UK Life and Tony Wyand, Group Executive Director Continental Europe. Replay will be available for 2 weeks until 9 May. The dial in number for replay is +44(0)20 8288 4459 and the pass code is 616722. Total Annual premium new business equivalent sales sales 3 months 3 months to Local to Local 31 March currency 31 March currency 2002 growth* 2002 growth* Life and pensions United Kingdom 1,818 (2%) 339 15% France 485 (11%) 58 (10%) Ireland 116 (2%) 31 29% Italy 234 1% 29 2% Netherlands (including Belgium and Luxembourg) 178 8% 35 11% Poland 18 (1%) 13 (18%) Spain 182 42% 32 40% Other Europe 67 16% 22 8% International 221 62% 39 46% ------ ------ ------ ------ Total life and pensions 3,319 2% 598 13% Investment sales United Kingdom 145 (53%) 15 (56%) Netherlands 31 114% 3 115% Other Europe 24 (45%) 2 (44%) International 107 152% 11 152% ------ ------ ------ ------ Total investment sales 307 (25%) 31 (28%) ------ ------ ------ ------ Total long-term savings 3,626 (1%) 629 10% ====== ====== ====== ====== Navigator sales 219 9% - - (not included above) New business contribution** 3 months to Local 31 March currency 2002 growth* Life and pensions United Kingdom 79 (2%) France 17 (8%) Ireland 9 55% Italy 7 (20%) Netherlands (including Belgium and Luxembourg) 6 24% Poland 3 (1%) Spain 14 20% Other Europe (2) (203%) International 4 492% ------ ------ Total life and pensions 137 1% ====== ====== * Growth rates are calculated based on constant rates of exchange ** Stated before the effect of solvency margin United Kingdom: Norwich Union, the leading life and pensions provider with a market share of over 11%, achieved good sales in the first three months of 2002. Total new business sales on an Annual Premium Equivalent (APE) basis were up 9% to £354 million (2001: £326 million), with life and pension sales up 15% to £339 million (2001: £294 million). Total new business sales were £2.0 billion (2001: £2.2 billion), reflecting lower single premium bond and investment sales. Total pension sales grew strongly, increasing 38% to £825 million (2001: £598 million), including stakeholder sales of £201 million. Norwich Union is the leading provider of stakeholder pensions having achieved its overall target market share of 20% and secured approximately one-third of the important IFA market. Sales through our joint venture with The Royal Bank of Scotland Group (RBSG) continued to increase in the first quarter of 2002. Total sales were up by 157% to £216 million (2001: £84 million). In reporting the Group's figures we have incorporated our 50% share of total sales, at £108 million. Included in our 50% share of sales are £56 million of single premium bonds, a new product for the joint venture, launched during the first quarter. We are confident this sales growth momentum will continue as new products such as term assurance and further pension contracts are introduced in 2002. In addition, we have agreed in principle to extend the RBSG joint venture to include unit trusts and Isas from early 2003. In a competitive market, single premium bond sales fell to £709 million (2001: £981 million). Our bond range was re-launched on 6 April with enhanced terms and sales to date are encouraging. Sales of retail investments were £145 million (2001: £310 million), as investors continued to adopt a cautious approach to retail investment products. Initial sales of our re-launched income and retirement products range have been encouraging, with annuity single premiums up 10% to £204 million (2001: £185 million). Mortgage product and other life sales were £80 million (2001: £92 million). Norwich Union is the lead provider to the top-six IFA companies with around 75% of sales coming from this channel. We have recently made a number of strategic investments in IFAs to support this important sector. We continue to build and expand our bancassurance and affinity partnership arrangements whilst at the same time investing in a salaried direct sales force and telesales operation. We believe that our positions in the IFA and non-IFA markets make us well placed to prosper in a de-polarised world. Our target is to increase our share of the total UK life and pensions market to 15% by the end of 2005. New business contribution was £79 million (2001: £81 million) and represents a new business margin (the ratio of new business contribution to sales measured on an annual premium equivalent basis) of 23.3% (full year 2001: 25.8%). This margin reflects a change in the business mix with a higher proportion of lower margin pension sales, partly offset by good first quarter margins achieved on annuity sales. France: In our French life business, the second largest in the CGNU Group, sales of single premium fixed interest AFER products grew by 16% to £279 million (2001: £249 million). This increase reflects customers' continued preference for fixed interest investments, assisted by the strength of AFER's brand and its position as the largest savings organisation in France. Against a strong first quarter in 2001, sales of unit-linked and other savings products were lower at £163 million (2001: £270 million) reflecting continued investor caution about investing in equity-backed products. A launch of unit- linked products, together with its associated marketing activity, has been planned this year to occur after the presidential elections in early May, when we anticipate that demand for these products will be stronger. Protection business sales were £43 million (2001: £45 million). New business contribution amounted to £17 million (2001: £19 million) with margins at 29.6% (full year 2001: 33.9%). Ireland: Hibernian Life & Pensions, our top five provider of life and pensions products, generated a 29% increase in total sales to £31 million on an APE basis (2001: £25 million). Total new business sales were £116m (2001: £123 million). New single premium pension sales increased strongly by 33% to £32 million (2001: £25 million), while sales of regular premium pensions were maintained at £12 million (2001: £12 million) in advance of the expected introduction of the Government's new pension initiative, the Personal Retirement Savings Account, on 1 January 2003. Life single premium sales were lower at £62 million (2001: £84 million) as demand for unit-linked bonds reflected lower investor confidence. Sales of regular premium life products increased significantly to £10 million (2001: £2 million) benefiting from sales of the Government's Special Savings Incentive Account before the end of April 2002 closing date. Total new business contribution increased to £9 million (2001: £6 million) with margins of 28.7% in line with the full year 2001 margin. Italy: Our major bancassurance partnerships in Italy have continued to grow strongly, consolidating our position as a leading provider of life products. Sales arising through our agreement with UniCredito Italiano's subsidiary - Cassa di Risparmio di Torino (CRT) - increased by 43% to £167 million (2001: £121 million). At Banca Popolare di Lodi (BPL), sales grew significantly to £42 million (2001: £5 million) as more branches of the BPL network came on stream. Sales through our other bancassurance partner, Banca delle Marche also increased to £7 million (2001: £6 million). Total new business sales were £234 million (2001: £238 million). Included in the first quarter of 2001 was £96 million of non-recurring business from a previous agreement. Excluding this effect, the underlying increase in new business sales was 69%. Total new business contribution amounted to £7 million (2001: £9 million) with margins of 24.3% in line with the full year 2001 margin. Netherlands (including Belgium and Luxembourg): Our top five life and pensions business in the Netherlands, Delta Lloyd, reported an increase in total sales of 17% to £209 million (2001: £184 million), including investment sales of £31 million (2001: £15 million). New business contribution increased to £6 million (2001: £5 million) with a new business margin of 17.2% (full year 2001: 22.3%). Total pension sales increased by 28% to £119 million (2001: £96 million) driven by an increase of 76% in individual pension business. This is largely as a result of the introduction in 2002 of attractively designed products, as management successfully sought to increase its market share. Sales of group pension business amounted to £57 million (2001: £60 million). The overall life market has seen demand fall following changes in the tax legislation introduced in early 2001. Delta Lloyd saw its market share increase with life sales of £59 million (2001: £73 million). Investment sales were up 114% to £31 million (2001: £15 million), despite continued investor caution. To meet a preference for guaranteed investment bonds, plans are underway to launch a new range in the second half of 2002. The integration of Bank Nagelmackers, which was acquired at the end of 2001, is on track and we are currently restructuring the back office systems. The benefits of the distribution potential from this bank are expected to come through in the second half of 2002. Poland: CU Polska continues to be the leading provider of individual life and private pensions in Poland, with a 19% share of the life market measured by total premium income and a 29% share of the private pensions market measured by assets under management. New life and savings business premiums of £11 million (2001: £11 million) remain flat due to the continuing difficult economic conditions. Pensions sales of £7 million (2001: £8 million) reflect low numbers of new entrants to the employment market who are eligible to buy private pensions. Spain: In Spain total new business premiums increased by 42% to £182 million (2001: £133 million) demonstrating the strength of our distribution in this important European growth market. We are the fourth-largest provider in the life insurance market and have the fourth-largest bancassurance network in Spain, with over 3,000 branches giving access to approximately 8 million potential customers. Total new business sales through Bancaja increased to £121 million (2001: £118 million). Sales through our more recent agreements with Unicaja, Caixa Galicia and Caja Espana contributed £47 million, including £26 million from sales of a limited offer single premium product. We continue to develop the distribution capability of these recent arrangements and new products will be launched through these partnerships in the coming months, based on those successfully sold through the Bancaja network. New business contribution increased to £14 million (2001: £12 million) producing a new business margin of 44.2%, which is in line with the full year 2001 result. Other Europe: Total life and pension sales from our other European businesses grew 16% to £67 million (2001: £59 million). In Germany, total new business premiums increased by 37% to £30 million (2001: £23 million) benefiting from a new broker relationship. In Turkey, total new business premiums were £5 million (2001: £6 million). In the emerging markets of Central and Eastern Europe we continue to develop our businesses in the Czech Republic, Hungary and Romania. As a result of lower investor confidence in equities, single premium sales were £23 million (2001: £24 million) from our Dublin-based offshore life and savings business. Sales of Luxembourg UCITS were £24 million (2001: £45 million). International: Our International life and pension businesses continued to grow significantly with total new business sales 62% higher at £221 million (2001: £135 million). Our United States life business contributed total new business premiums of £110 million (2001: £70 million), up 54%, driven by the continued demand for fixed annuity products. In Australia, total life and pension sales were 8% higher at £62 million (2001: £57 million) and unit trust sales were £107 million (2001: £42 million). Whilst not included in the new business figures, sales of Navigator, a market-leading master trust, increased 9% to £219 million (2001: £200 million). In Singapore, our recent bancassurance partnership with DBS Group Holdings Limited (DBS) generated total sales of £48 million (2001: nil). We are on track to launch further new products in the second quarter of 2002. In February, we announced a second bancassurance partnership with DBS to enter the long-term savings market in Hong Kong. The bancassurance distribution is for ten years and will give us exclusive access to DBS's one million customers in Hong Kong. We expect sales from this partnership in the second half of 2002. Notes to Editors 1. CGNU plc is the UK's largest insurance group and one of the top-five insurers in Europe with substantial positions in other markets around the world. CGNU is the world's seventh-largest insurer based on gross worldwide premiums. CGNU's principal business activities are long-term savings, fund management and general insurance, with worldwide premium income and retail investment sales from ongoing business of over £28 billion for the year ended 31 December 2001, and assets under management of more than £200 billion as at 31 December 2001. 2. New business figures have been translated at average exchange rates applying for the period. The average euro rates employed in this announcement are 1 euro = £0.61 (three months to 31 March 2001: 1 euro = £0.63; year to 31 December 2001: 1 euro = £0.62). 3. All growth rates are quoted in local currency. 4. The 2001 comparatives for new business margin and contribution have not been restated using start of 2002 economic assumptions as the impact of such restatement is immaterial. 5. Definitions: Annual premium equivalent (APE) is a UK industry standard for calculating life, pensions and investments new business levels. It is the total of new regular premiums and 10% of single premiums. New business contribution is the present value of the projected stream of after-tax distributable earnings from new life and pensions sales. New business contribution before tax is calculated by grossing up the new business contribution after-tax at the full corporation tax rate for UK business and at appropriate rates of tax for other countries. New business margin is a UK industry standard calculation based on new business contribution (before the effect of solvency margin) divided by sales measured on an APE basis. 6. Cautionary statements The cautionary statements identify important factors that could cause our actual results to differ materially from those projected in forward looking statements made in this press release. Forward looking statements are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed. CGNU plc is a company registered in England No. 2468686. Registered office St Helen's 1 Undershaft London EC3P 3DQ Statistical supplement CONTENTS Analyses 1 Detailed worldwide long-term savings new business analysis 2 Analysis of UK long-term savings by distribution channel - sales and APE 3 Detailed analysis of new business contribution 4 Principal economic assumptions SUPPLEMENT 1 Detailed worldwide long-term savings new business analysis Single 3 months 3 months to to Local 31 March 31 March currency 2002 2001 growth £m £m % United Kingdom Individual pensions 440 371 19% Group pensions 253 138 83% Mortgage - - - Annuities 204 185 10% Bonds 709 981 (28%) Other life 37 61 (39%) ------ ------ ------ Total life and pensions 1,643 1,736 (5%) Peps/Isas/unit trusts/Oeics 145 308 (53%) ------ ------ ------ 1,788 2,044 (13%) France AFER (excluding unit-linked) 279 249 16% Unit-linked & other savings 157 266 (39%) Protection business 39 39 3% ------ ------ ------ 475 554 (12%) Ireland Life & savings 62 84 (23%) Pensions 32 25 33% ------ ------ ------ 94 109 (11%) Italy Life & savings 228 232 1% ------ ------ ------ 228 232 1% Netherlands (including Belgium and Luxembourg) Individual pensions 61 36 75% Group pensions 48 56 (12%) Life 50 60 (15%) ------ ------ ------ Total life and pensions 159 152 8% Unit trusts 31 15 114% ------ ------ ------ 190 167 17% Poland Life & savings 3 2 103% Pensions 2 - - ------ ------ ------ 5 2 218% Spain Life & savings 148 109 41% Pensions 19 12 62% ------ ------ ------ 167 121 43% Other Europe Life & pensions 50 42 21% UCITS and other 24 45 (45%) ------ ------ ------ 74 87 (13%) International Life & pensions 202 121 66% Unit trusts 107 42 152% ------ ------ ------ 309 163 88% ------ ------ ------ Total long-term savings 3,330 3,479 (3%) ====== ====== ====== Analysed: Life & pensions 3,023 3,069 (1%) Investment sales 307 410 (25%) ------ ------ ------ Total long-term savings 3,330 3,479 (3%) ====== ====== ====== Navigator sales (not included above) 219 200 9% Regular Total 3 months 3 months to to Local Local 31 March 31 March currency currency 2002 2001 growth growth £m £m % % United Kingdom Individual pensions 31 26 19% 19% Group pensions 101 63 60% 76% Mortgage 15 11 36% 36% Annuities - - - 10% Bonds - - - (28%) Other life 28 20 40% (20%) ------ ------ ------ ------ Total life and pensions 175 120 46% (2%) Peps/Isas/unit trusts/Oeics - 2 - (53%) ------ ------ ------ ------ 175 122 43% (9%) France AFER (excluding unit-linked) - - - 16% Unit-linked & other savings 6 4 42% (38%) Protection business 4 6 (30%) (2%) ------ ------ ------ ------ 10 10 1% (11%) Ireland Life & savings 10 2 343% (13%) Pensions 12 12 3% 23% ------ ------ ------ ------ 22 14 60% (2%) Italy Life & savings 6 6 5% 1% ------ ------ ------ ------ 6 6 5% 1% Netherlands (including Belgium and Luxembourg) Individual pensions 1 - - 76% Group pensions 9 4 144% (1%) Life 9 13 (30%) (18%) ------ ------ ------ ------ Total life and pensions 19 17 14% 8% Unit trusts - - - 114% ------ ------ ------ ------ 19 17 14% 17% Poland Life & savings 8 9 (13%) 4% Pensions 5 8 (29%) (7%) ------ ------ ------ ------ 13 17 (21%) (1%) Spain Life & savings 9 9 7% 38% Pensions 6 3 127% 75% ------ ------ ------ ------ 15 12 36% 42% Other Europe Life & pensions 17 17 4% 16% UCITS and other - - - (45%) ------ ------ ------ ------ 17 17 4% (10%) International Life & pensions 19 14 30% 62% Unit trusts - - - 152% ------ ------ ------ ------ 19 14 30% 83% ------ ------ ------ ------ Total long-term savings 296 229 31% (1%) ====== ====== ====== ====== Analysed: Life & pensions 296 227 32% 2% Investment sales - 2 (100%) (25%) ------ ------ ------ ------ Total long-term savings 296 229 31% (1%) ====== ====== ====== ====== Navigator sales (not included above) - - - 9% SUPPLEMENT 2 Analysis of UK long-term savings by distribution channel Sales Single 3 months 3 months to to Local 31 March 31 March currency 2002 2001 growth £m £m % IFA - life and pensions products 1,211 1,284 (6%) - investment products 89 198 (55%) ------ ------ ------ 1,300 1,482 (12%) Bancassurance partnership with RBSG - life and pensions products 104 38 174% - investment products - - - ------ ------ ------ 104 38 174% Other Partnerships/Direct - life and pensions products 328 414 (21%) - investment products 56 110 (49%) ------ ------ ------ 384 524 (27%) ------ ------ ------ Total UK long-term savings 1,788 2,044 (13%) ====== ====== ====== Regular 3 months 3 months to to Local 31 March 31 March currency 2002 2001 growth £m £m % IFA - life and pensions products 140 95 47% - investment products - 1 - ------ ------ ------ 140 96 46% Bancassurance partnership with RBSG - life and pensions products 4 4 - - investment products - - - ------ ------ ------ 4 4 - Other Partnerships/Direct - life and pensions products 31 21 48% - investment products - 1 - ------ ------ ------ 31 22 41% ------ ------ ------ Total UK long-term savings 175 122 43% ====== ====== ====== Annual premium equivalent Life and Investment pensions sales sales Local Local currency currency growth growth £m % £m % IFA 261 17% 9 (57%) Bancassurance partnership with RBSG 14 85% - - Other Partnerships/Direct 64 2% 6 (53%) ------ ------ ------ ------ Total UK long-term savings 339 15% 15 (56%) ====== ====== ====== ====== Total sales Local currency growth £m % IFA 270 11% Bancassurance partnership with RBSG 14 85% Other Partnerships/Direct 70 (7%) ------ ------ Total UK long-term savings 354 9% ====== ====== SUPPLEMENT 3 Detailed analysis of new business contribution (a)Before the effect of solvency margin Annual premium New business equivalent * contribution ** *** 3 months 3 months 3 months 3 months 2002 2001 2002 2001 £m £m £m £m Life and pensions business United Kingdom 339 294 79 81 Europe (excluding UK) France 58 66 17 19 Ireland 31 25 9 6 Italy 29 29 7 9 Netherlands (including Belgium and Luxembourg) 35 32 6 5 Poland - Life 8 9 2 2 - Pensions 5 8 1 1 Spain 32 24 14 12 Other 22 21 (2) 2 International 39 26 4 (1) ------ ------ ------ ------ 598 534 137 136 ====== ====== ====== ====== New business margin **** 3 months 3 months Full year 2002 2001 2001 % % % Life and pensions business United Kingdom 23.3% 27.6% 25.8% Europe (excluding UK) France 29.6% 29.1% 33.9% Ireland 28.7% 24.1% 28.5% Italy 24.3% 30.8% 22.2% Netherlands (including Belgium and Luxembourg) 17.2% 15.5% 22.3% Poland - Life 24.1% 21.7% 25.2% - Pensions 19.2% 12.5% 8.3% Spain 44.2% 49.8% 46.5% Other (9.1%) 9.4% - International 10.2% (3.8%) 12.1% ------ ------ ------ 22.9% 25.5% 25.5% ====== ====== ====== * Annual premium equivalent represents regular premiums plus 10% of single premiums. ** Before effect of solvency margin. *** New business contribution before the effect of solvency margin includes minority interests in 2002 of £12 million (three months to 31 March 2001: £11 million). This comprises minority interests in France of £1 million (three months to 31 March 2001: £1 million), Italy £3 million (three months to 31 March 2001: £4 million), and Spain £8 million (three months to 31 March 2001: £6 million). **** New business margin represents the ratio of new business contribution to annual premium equivalent, expressed as a percentage. (b)Including the effect of solvency margin* 3 months 3 months 2002 2001 Life and pensions business £m £m United Kingdom 76 78 Europe (excluding UK) France 7 11 Ireland 8 6 Italy 5 7 Netherlands (including Belgium and Luxembourg) 1 - Poland - Life 2 1 - Pensions 1 1 Spain 12 10 Other (3) 2 International 2 (3) ------ ------ 111 113 ====== ====== * The effect of solvency margin represents the impact of holding the minimum European Union (EU) solvency margin (or equivalent for non-EU operations) and discounting to present value the projected future releases from the solvency margin to shareholders. SUPPLEMENT 4 Principal economic assumptions New business contribution has been calculated using the economic assumptions set at the end of the previous year, as shown in the tables below. United Kingdom France 31 Dec 31 Dec 31 Dec 31 Dec 2001 2000 2001 2000 Risk discount rate 7.7% 7.4% 8.6% 8.5% Pre-tax investment returns: Base government fixed interest 5.0% 4.7% 5.1% 5.0% Ordinary shares 7.5% 7.2% 7.1% 7.0% Property 6.5% 6.2% 6.6% 6.5% Future expense inflation 3.7% 3.7% 2.5% 2.5% Tax rate 30.0% 30.0% 36.4% 37.8% Ireland Italy 31 Dec 31 Dec 31 Dec 31 Dec 2001 2000 2001 2000 Risk discount rate 9.3% 9.1% 7.6% 7.5% Pre-tax investment returns: Base government fixed interest 5.3% 5.3% 5.3% 5.3% Ordinary shares 8.3% 8.3% 8.3% 8.3% Property 6.8% 6.8% 6.8% 6.8% Future expense inflation 4.0% 5.0% 3.3% 3.3% Tax rate 16.0% 20.0% 41.0% 43.0% Netherlands Poland - Life 31 Dec 31 Dec 31 Dec 31 Dec 2001 2000 2001 2000 Risk discount rate 8.0% 8.0% 18.5% 20.0% Pre-tax investment returns: Base government fixed interest 5.1% 5.0% 12.5% 12.5% Ordinary shares 8.1% 7.9% 12.5% 12.5% Property 6.6% 6.5% n/a n/a Future expense inflation 2.5% 2.5% 9.2% 9.2% Tax rate 25.0% 25.0% 28.0% 28.0% Poland - Pensions Spain 31 Dec 31 Dec 31 Dec 31 Dec 2001 2000 2001 2000 Risk discount rate 16.9% 17.3% 8.3% 8.4% Pre-tax investment returns: Base government fixed interest 12.5% 12.5% 5.3% 5.4% Ordinary shares 12.5% 12.5% 8.3% 8.4% Property n/a n/a 6.8% 6.9% Future expense inflation 9.2% 9.2% 3.2% 4.0% Tax rate 28.0% 28.0% 35.0% 35.0% This information is provided by RNS The company news service from the London Stock Exchange

Companies

Aviva (AV.)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today