CGU & Bancaja Forge Alliance in Spain

CGU PLC
19 May 2000



CGU & BANCAJA FORGE ALLIANCE IN SPAIN

CGU has entered into a bancassurance partnership with Bancaja, Spain's fourth
largest savings bank.  As part of this alliance, CGU has entered into binding
agreements through which it will acquire 50% of the issued share capital and
management control of Bancaja's life insurance subsidiary, Aseval.  Aseval is
the 13th largest life assurer in Spain, with a market share of 2.2%, and the
9th largest pension fund manager, with 2.4% of this market.
It has exclusive access to Bancaja's distribution network of around 1,000
branches centred around the provinces of Valencia, Castellon and Alicante,
allowing it to sell life and pensions products to Bancaja's 2.4 million
customers.

The consideration for the 50% stake is around £200m (Ptas 55bn) with further
amounts payable if Aseval achieves certain performance targets.  At 31
December 1999, Aseval had an embedded value of around £87m (Ptas 24bn).  Its
net life premium income and estimated post-tax new business added value in
1999 were £221m (Ptas 61bn) and £11m (Ptas 3bn) respectively.  The
transaction is subject to regulatory approval and completion is expected
later this year.

Bob Scott, CGU's Group Chief Executive commented:

'We are delighted to join with Bancaja in this partnership.  This is a
further important step in our strategy of increasing our distribution power
and growing life businesses in attractive markets.  Aseval is a fast growing
life and savings business with an impressive management team.  The combined
expertise of the two partners in product design, marketing and customer
service will strengthen its growth.  This is an excellent opportunity for
CGNU with bancassurance accounting for some 80% of new life business in
Spain.  Combined with the existing CGU and Norwich Union businesses, CGNU
will rank 9th in the Spanish life market with 3.3% market share and a strong
platform for growth.'

Julio de Miguel, President of Bancaja, said:

'We are extremely positive about this ground-breaking agreement reached with
CGU, a prestigious partner, whose objectives are highly compatible with our
own.  This strategic alliance permits us to combine our complementary skills
and I am convinced that it will be very beneficial to both of us.  Some years
ago, when Bancaja decided to pursue insurance and pensions business to meet
our customers' needs and to build their loyalty, we knew it would be a key
strategic move for the future.  Today, with this partnership sealed with CGU
- the UK's leading insurer and one of Europe's largest players - Bancaja is
now even better prepared to meet the immediate challenges of globalisation
and innovation in one of the bank's key strategic areas.'

Enquiries:

Peter Foster, Group Finance Director              + 44 (0)20 7662 2007

Media:  Laura Frost, The Maitland Consultancy     + 44 (0)20 7379 5151

Notes to Editors

*  On  21 February 2000, CGU and Norwich Union announced a proposed merger  of
the  two groups to form CGNU.  Shareholders approved the merger at the  end
of  March and the proposed merger is on schedule to be completed around the
end of May 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.  It will be the second  largest  UK
based  fund  manager  with  worldwide assets  and  additional  funds  under
management in excess of £200bn.

*  Both CGU and Norwich Union have existing life businesses in Spain with a
combined market share of over 1% and life premiums of £103m in 1999 (Ptas
28.5bn).  Including this acquisition, CGNU would have pro-forma 1999 life
premiums of around £322m (Ptas 89bn), making it the 9th largest Spanish life
assurer with a market share of around 3.3%.

*  The Bancaja Group was created from the merger of four regional savings
banks between 1989 and 1993.  Today, the Group is the seventh largest
financial institution in Spain and the fourth largest savings bank.  The
Group's operations are centred around the provinces of Valencia, Castellon and
Alicante.  This region accounts for 10% of both Spain's population and GDP
and is one of the fastest developing regions.  Bancaja had total assets of
around £12bn (Ptas 3,400bn) at the end of 1999.

*  The  Spanish  life market has grown by 17% annually (compound growth  rate)
since  1995.  Aseval has significantly outperformed the market, with annual
compound  growth  of 65% over the same period.  In 1999  it  had  net  life
premiums  of around £221m (Ptas 61bn) and funds under management of  around
£890m (Ptas 246bn) of which about half were pension funds.

*  The mix of Aseval's business as measured by total funds under management is
51%  pensions, 36% traditional life and 13% unit-linked.  Some 95%  of  the
business is savings, with 5% life protection policies.

*  All figures are quoted at £1 = Ptas 276.