6 Months 2001 New Business

CGNU PLC 18 July 2001 CGNU plc Worldwide long-term savings new business Six months to 30 June 2001 18 July 2001 - Record half-year worldwide sales at £7.1 billion - Worldwide life and pension sales 19% higher at £6.3 billion - Record half-year total UK new business sales up 12% to £4.1 billion (up 23% on an APE basis) - Continental Europe life and pension sales up 29% to £2.4 billion Richard Harvey, Group Chief Executive, commented: 'We achieved record half-year new business sales totalling £7.1 billion. Showing a similar pattern to the first quarter, our increased distribution more than offset the effect of weak equity markets on investment sales, to produce overall growth of 5% in total savings business. Worldwide life and pension sales grew strongly, up 19% to £6.3 billion. 'Our UK business returned record half-year sales up 12% at £4.1 billion following the outstanding results produced in 2000. Excellent individual and corporate pensions growth, up 38% to £1.3 billion, included a good start to stakeholder pensions, building on a leading position in the overall pensions market. We are a top-five Isa provider in the UK and achieved excellent investment sales against the market trend, up 7% to £0.6 billion. We will continue to capitalise on our financial and brand strength in the UK. 'Our life businesses in continental Europe produced life and pension sales up 29% to £2.4 billion. Our business in France outperformed the market and our businesses in Italy and Spain, up 205% and 583% respectively, reflected the benefit of our increasing distribution capability. We recently announced the expansion of our bancassurance network in Spain, providing a further opportunity for growth in a market with excellent long-term potential.' Enquiries: Analysts/Investors: Philip Scott, Group Executive Director UK Life +44(0)2380 372700 Steve Riley, Investor Relations Director +44(0)20 7662 8115 Media: Hayley Stimpson, Director of External Affairs +44(0)20 7662 7544 Geoffrey Pelham-Lane, Financial Dynamics +44(0)20 7269 7194 Single Regular Total Local Local Local 6 months currency 6 months currency currency 2001 growth 2001 growth growth £m £m Life and pensions United Kingdom 3,286 11% 277 52% 13% France 1,015 3% 20 (7%) 3% Ireland 229 14% 28 11% 14% Italy 369 205% 18 198% 205% Netherlands (including Belgium and Luxembourg) 277 28% 47 28% 28% Poland 3 (41%) 30 (80%) (78%) Spain 271 614% 23 350% 583% Other Europe 80 46% 31 4% 31% International 254 11% 32 30% 13% ------ ------ ------ ------ ------ Total life and pensions 5,784 20% 506 5% 19% Investment sales United Kingdom 550 8% 7 (36%) 7% Netherlands 40 (93%) - - (93%) Other Europe 82 (33%) - - (33%) International 84 (46%) - - (46%) ------ ------ ------ ------ ------ Total investment sales 756 (45%) 7 (36%) (45%) ------ ------ ------ ------ ------ Total long-term savings 6,540 6% 513 4% 5% ====== ====== ====== ====== ====== Navigator sales (not included above) 437 25% - - 25% United Kingdom: Norwich Union, the leading UK life company with a market share of over 11%, achieved record sales in the first half of 2001. Total sales increased by 12% to £4.1 billion (2000: £3.7 billion), and on an annual premium equivalent (APE) basis improved by 23% to £668 million (2000: £541 million), building upon the outstanding results produced in 2000. Total pension sales grew by 38% to £1.3 billion (2000: £0.9 billion) reflecting changes in the tax regime, a flight to quality and the stimulus given to the market generally by the stakeholder pension legislation. Individual pension sales at £832 million (2000: £480 million) showed an increase of 73%, including stakeholder sales of £38 million. Group pension sales were in line with last year at £428 million (2000: £436 million), and include stakeholder sales of £5 million. Norwich Union is represented on all national IFA stakeholder panels and early indications are that stakeholder sales are performing well in this new and developing segment of the pensions market. Single premium bond sales increased by 7% to £1.8 billion (2000: £1.7 billion) in a highly competitive market, reflecting continued popularity with investors for this form of long term investment. Regular premium mortgage product sales grew 21% to £23 million (2000: £19 million) largely due to the growth in mortgage protection sales. Total other life products at £155 million (2000: £130 million) included excellent growth in term assurance sales, up 35% to £27 million (2000: £20 million), following strong sales in the first three months of 2001. Annuity single premiums were £351 million (2000: £420 million) reflecting our continuing policy of pricing annuities for profit. Investment sales continue to perform well with single premium sales increasing by 8% to £550 million (2000: £510 million) reflecting strong Isa sales. Norwich Union is a top-five Isa provider, based on Isa funds under management, and markets the leading corporate bond Isa. IFAs continue to demonstrate strong support with around 75% of new business coming from that source, emphasising our commitment to this important channel. Norwich Union also operates on a multi-channel basis including partnerships such as Tesco and The Royal Bank of Scotland Group plc (RBSG), a salaried direct salesforce and a telesales operation. Additionally, an online wealth management service, norwichunion.com, was launched on 24 May 2001 offering a comprehensive range of interactive financial planning tools and information. Later this year norwichunion.com will introduce a fund supermarket and a share dealing service, the first in a range of online financial services products. Our partnership with RBSG has produced single premium sales of £166 million and regular premium sales of £12 million in the six months to 30 June. Following the launch of a stakeholder product in April, a new range of life products was launched in June through National Westminster Life Assurance. We are on target to launch Royal Scottish Assurance-branded life products at the end of August. In reporting Norwich Union's numbers we have included our 50% share of sales from the RBSG partnership. France: Our top-10 business in France outperformed the market in the first half of the year. Sales, up 3% to £1.0 billion (2000: £1.0 billion), are pleasing when set against the contraction in the French market as a whole, with latest available statistics indicating a total market decline of some 15% over the first five months of this year. The difficult equity markets have resulted in a consumer preference for fixed interest investments evidenced by strong growth in 'French Franc' single premium AFER sales, up 27% to £472 million (2000: £363 million). AFER is the largest savings organisation in France with 540,000 members. Following this trend, unit-linked sales fell to £475 million (2000: £548 million). Protection business saw increased sales to £88 million (2000: £78 million). Ireland: Hibernian Life & Pensions is a top-five provider of life and pensions products and total new premium sales increased 14% to £257 million (2000: £223 million). Sales of single premium pensions were particularly strong increasing by 150% to £86 million (2000: £34 million), building on the momentum established in the first quarter. Regular premium life business increased to £9 million (2000: £7 million) including £2 million from the Government's new Special Savings Incentive Account (SSIA) launched during May 2001. Our strong distribution links with IFAs and a competitive product will allow us to compete strongly as the SSIA becomes an established part of the savings market in Ireland. Excellent sales of single premium with-profit Celebration Bonds increased by 38% to £99 million (2000: £71 million) as investors recognised the strength of our with-profit products against the backdrop of volatile investment markets. Single premium life and savings sales were nevertheless held back by lower unit-linked bond sales. Italy: Total new business premiums increased significantly by 205% to £387 million (2000: £125 million), benefiting from our recently expanded bancassurance agreements. Our new relationship with UniCredito Italiano to provide life and savings products to its subsidiary Cassa di Risparmio di Torino saw strong sales of £226 million (2000: £nil), with £105 million of sales in the last three months. Development of new individual pension products designed to take advantage of the new Italian fiscal incentives for retirement savings enacted earlier this year, are well advanced and will be introduced with our distribution partners starting in the third quarter of 2001. This will offer further opportunities in a market with excellent long-term growth potential. Netherlands (including Belgium and Luxembourg): Delta Lloyd Nuts Ohra, our top-five business in the Netherlands, reported new life and pension sales up 28% at £324 million (2000: £250 million) continuing the progress made in the first quarter of 2001. Total life sales increased by 18% to £139 million (2000: £116 million) despite new tax reforms, effective from 1 January this year, that were expected to make such products less attractive. Total pensions sales increased by 36% to £185 million (2000: £134 million). Investment sales of £40 million (2000: £584 million) continue to reflect the volatility in investment markets, which has resulted in investors favouring more traditional deposit-based savings over equity-backed products. In May four Delta Lloyd-branded and internet-enabled Euro funds were launched in Germany, and this was followed in June by the launch of a worldwide investment fund into Belgium. The launch of the funds and Delta Lloyd brand into Germany prepares the way to benefit from the 'Riester' pension reforms, expected to take effect in January 2002, which are likely to increase demand for mutual funds and equity-linked savings products. Work is also underway to obtain the necessary approval to enable the marketing of all Delta Lloyd and Ohra investment funds across borders, positioning them for further opportunities in the target markets of Germany and Belgium. Poland: CU Polska is the market leader for private pensions and individual life assurance. New regular premium pension sales of £13 million (2000: £109 million) reflect that sales are now restricted to new entrants to the Polish employment market following the one-off pensions privatisation in 1999, which flowed through into 2000. We continue to capture our market share of new entrants to the employment market. Total new life sales of £20 million (2000: £27 million) reflected difficult economic conditions and a competitive market. Spain: Total sales increased by 583% to £294 million (2000: £42 million). Our partnership with Bancaja, Spain's fourth-largest savings bank, continues to produce strong growth contributing £269 million (2000: £nil), benefiting from sales of attractive savings products. Sales at Plus Ultra, our Spanish subsidiary, were £25 million (2000: £42 million) reflecting lower demand for unit-linked products during a period of uncertain stockmarket conditions. We announced in June a new partnership with Unicaja, Spain's eighth-largest savings bank, which will provide exclusive access to approximately two million customers through 750 branches. This new relationship, due to complete in the third quarter of this year, geographically complements our agreement with Bancaja and increases our distribution capacity to some 1,840 branches, giving us the third-largest savings bank distribution network and the sixth-largest among all financial institutions in Spain. Our expanding distribution capability provides further development opportunities in a key European market with excellent long-term growth potential, and also consolidates our top-five life market position. Other European Businesses: Our Dublin-based offshore life and investment business, which commenced trading late in the first quarter of 2000, generated single premium sales of £48 million (2000: £20 million). In Germany sales totalled £42 million, which were in line with last year. In Turkey we have been able to maintain the sales momentum despite the economic turmoil with total new business ahead of last year at £12 million (2000: £11 million). Following recent pensions legislation we are well placed to benefit from this new opportunity once the detailed regulations become effective early next year. In the emerging markets of Eastern Europe our Czech Republic and Romanian businesses continue to make progress. In Hungary we completed at the end of June the acquisition of Magyar Elet es Nyugdijbiztosito Reszvenytarsasag (Mebit), the sixth-largest life business. Lower sales of Luxembourg UCITS at £82 million (2000: £121 million) reflected lower consumer demand in the context of the volatility in international stock markets. International: Total international life and pension sales were 13% higher at £286 million (2000: £251 million). Our business in the United States contributed single premium business of £142 million (2000: £85 million), up 53%, as a result of good annuity sales while regular premium sales were ahead 66% at £17 million (2000: £9 million). In Australia, total life and pension sales were £118 million (2000: £130 million). Unit trust sales at £84 million (2000: £166 million) reflected the continuing market trend towards multi-manager products. While not included in the new business figures, Navigator sales were £437 million (2000: £376 million), an increase of 25%. Navigator is a leading master trust in the market. On 1 April and 1 May we concluded the sale of our two Canadian life businesses. Total Canadian sales in the period contributed £4 million (2000: £19 million) of single premium and £3 million (2000: £7 million) of regular premium business. Notes to Editors 1. CGU plc and Norwich Union plc merged on 30 May 2000 to create CGNU plc, the UK's largest insurance group and one of the top-five insurers in Europe with substantial positions in other markets around the world, making it the world's sixth-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 £27 billion and assets under management of more than £210 billion. 2. New business figures have been translated at average exchange rates applying for the period. 2001 2000 Australia - dollars £1 = 2.77 £1 = 2.58 Poland - zloty £1 = 5.80 £1 = 6.65 United States - dollars £1 = 1.43 £1 = 1.57 The average euro rates employed in this announcement are 1 euro = £0.62 (six months to 30 June 2000: 1 euro = £0.61). 3. All growth rates are quoted in local currency. 4. 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 plus 10% of single premiums. Annual premium equivalent Local 6 months currency 2001 growth £m United Kingdom IFA 507 20% Partnerships/Direct 161 35% ------ ------ 668 23% France 121 1% Ireland 51 12% Italy 55 203% Netherlands (including Belgium and Luxembourg) 79 (33%) Poland 30 (80%) Spain 50 464% Other Europe 47 (1%) International 66 4% ------ ------ Total long-term savings 1,167 5% ====== ====== Total long-term savings APE grew 17% over the first half of 2001 to £1,154 million (2000: £980 million) when excluding total Poland pensions new business APE of £13 million (2000: £109 million). The reduction in Poland pensions new business APE reflects the one-off pensions privatisation in 1999 that flowed through into 2000. 5. Netherlands sales for the six months to 30 June 2001 include life and pension sales from our businesses in Belgium and Luxembourg. As a result comparatives for 2000 have been amended by re-classifying Belgium and Luxembourg sales from Other Europe to the Netherlands. Total Belgium and Luxembourg sales for the last five reporting periods are as follows. Life and pensions Single Regular £m £m Sales for 3 months ended 31 March 2000 6 2 Sales for 6 months ended 30 June 2000 11 4 Sales for 9 months ended 30 September 2000 17 5 Sales for 12 months ended 31 December 2000 24 9 Sales for 3 months ended 31 March 2001 6 2 CGNU plc is a company registered in England No. 2468686. Registered office: St Helen's, 1 Undershaft, London, EC3P 3DQ Worldwide long-term savings new business Single Regular 6 6 Local 6 6 Local months months currency months months currency 2001 2000 growth 2001 2000 growth £m £m £m £m United Kingdom Individual pensions 768 445 73% 64 35 83% Group pensions 280 346 (19%) 148 90 64% Mortgage - - - 23 19 21% Annuities 351 420 (16%) - - - Bonds 1,773 1,660 7% 1 3 (67%) Other life 114 95 20% 41 35 17% ------ ------ ------ ------ ------ ------ Total life and pensions 3,286 2,966 11% 277 182 52% Peps/Isas/ unit trusts/Oeics 550 510 8% 7 11 (36%) ------ ------ ------ ------ ------ ------ 3,836 3,476 10% 284 193 47% France AFER (excluding unit-linked) 472 363 27% - - - Unit-linked & other savings 467 540 (15%) 8 8 (1%) Protection business 76 65 14% 12 13 (10%) ------ ------ ------ ------ ------ ------ 1,015 968 3% 20 21 (7%) Ireland Life & savings 143 164 (14%) 9 7 26% Pensions 86 34 150% 19 18 5% ------ ------ ------ ------ ------ ------ 229 198 14% 28 25 11% Italy Life & savings 369 119 205% 18 6 198% ------ ------ ------ ------ ------ ------ 369 119 205% 18 6 198% Netherlands (including Belgium and Luxembourg) Individual pensions 74 75 (2%) - - - Group pensions 96 50 89% 15 9 57% Life 107 89 18% 32 27 18% ------ ------ ------ ------ ------ ------ Total life and pensions 277 214 28% 47 36 28% Unit trusts 40 584 (93%) - - - ------ ------ ------ ------ ------ ------ 317 798 (61%) 47 36 28% Poland Life & savings 3 5 (41%) 17 22 (32%) Pensions - - - 13 109 (90%) ------ ------ ------ ------ ------ ------ 3 5 (41%) 30 131 (80%) Spain Life & savings 253 32 668% 17 4 300% Pensions 18 5 263% 6 1 615% ------ ------ ------ ------ ------ ------ 271 37 614% 23 5 350% Other Europe Life & pensions 80 53 46% 31 32 4% UCITS and other 82 121 (33%) - - - ------ ------ ------ ------ ------ ------ 162 174 (9%) 31 32 4% International Life & pensions 254 228 11% 32 23 30% Unit trusts 84 166 (46%) - - - ------ ------ ------ ------ ------ ------ 338 394 (12%) 32 23 30% ------ ------ ------ ------ ------ ------ Total long-term savings 6,540 6,169 6% 513 472 4% ====== ====== ====== ====== ====== ====== Analysed: Life & pensions 5,784 4,788 20% 506 461 5% Investment sales 756 1,381 (45%) 7 11 (36%) ------ ------ ------ ------ ------ ------ Total long-term savings 6,540 6,169 6% 513 472 4% ====== ====== ====== ====== ====== ====== Navigator sales (not included above) 437 376 25% - - - Analysis of UK long-term savings sales by distribution channel Single Regular 6 6 Local 6 6 Local months months currency months months currency 2001 2000 growth 2001 2000 growth £m £m £m £m IFA -life and pensions products 2,423 2,419 - 225 138 63% -investment products 350 360 (3%) 4 6 (33%) ------- ------- ------- ------ ------ ------- 2,773 2,779 - 229 144 59% Partnerships/Direct - life and pensions products 863 547 58% 52 44 18% - investment products 200 150 33% 3 5 (40%) ------- ------- ------- ------ ------ ------- 1,063 697 53% 55 49 12% ------- ------- ------- ------ ------ ------- Total UK long-term savings 3,836 3,476 10% 284 193 47% ====== ====== ====== ====== ====== ======

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