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 +44(0)20 7662 2050 Analysts/Investors: Steve Riley, Head of Investor Relations +44(0)20 7662 8115 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.

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