Final Results - Year Ended 31 Dec 1999, Part 1

CGU PLC
21 February 2000



Part 1
                                CGU plc
            UNAUDITED RESULTS - 12 MONTHS ENDED 31 DECEMBER 1999
                                      
* Pre-tax operating profit, including life achieved operating profits,  of
  £1,114m. (1998 £1,298m included a one-off benefit of £235m to life achieved
  operating profits.)

* Life  achieved  operating  profits  amounted  to  £891m  (1998  £1,021m
  including a £235m one-off benefit).  This was £343m higher than the modified
  statutory  life  profits of £548m (1998 £498m) (see life profits  reporting
  below).

* Using the modified statutory basis, the group modified statutory pre-tax
  operating profit was £771m (1998 £775m).

* Life  new  business up 33% to £7.1bn.  New business value up 46%  on  an
  achieved profit basis.

* General  insurance  profit  of £459m  (1998 £482m)  included  a  £111m
  improvement in underwriting results, offset by lower longer term investment
  returns.

* Merger integration completed ahead of schedule.

* Full year's dividend up 8% to 38.0p.

* Strategic  bancassurance partnership in the  UK  with  Royal  Bank  of
  Scotland.
                         -------------------------------
Note:
Operating  profits shown above exclude goodwill amortisation  of  £19m  (1998
£7m)  and  exceptional  items of £151m.  Exceptional  items  comprise  merger
integration  costs  of £120m and integration incentive plans  of £31m  (1998
exceptional items of £610m comprise merger integration costs of £260m and  an
additional claims provision of £350m).

Life profits reporting
In  reporting  our  headline operating profit above, life profits  using  the
'achieved' profits basis have been included. This is used throughout the  CGU
Group  and  by  many in the investment community to assess performance.   The
modified  statutory basis which is used in our financial statements shown  on
page  21,  is  also  identified above. We have increased  the  focus  on  the
achieved profits basis, as we believe life achieved operating profits  are  a
better  measure of the performance of our life businesses than  the  modified
statutory  basis, which is deliberately conservative and more concerned  with
solvency  protection and distributability than performance.  The  basis  used
for  reporting achieved profits is consistent with the approach used  by  the
company for publishing supplementary information in the past.   The 1998 one-
off  benefit to life achieved operating profits resulted from an increase  in
the  assumed  margins  for  the  return  on  equities  above  fixed  interest
securities.

BOB SCOTT, GROUP CHIEF EXECUTIVE, COMMENTED:

'1999  was  a  year  of strong progress.  Our life and  savings  businesses
produced  strong  organic  growth  and  we  have  strengthened  our  multi-
distribution  capability through bancassurance agreements  in  the  UK  and
Continental  Europe.  Our life, savings and health businesses  now  account
for 53% of total business. Our asset management businesses had another good
year  and  we  have laid the foundation for the achievement of a  sustained
improvement  in  general  insurance returns.  We  have  also  achieved  our
integration  savings targets six months ahead of schedule and  strengthened
our  market  positions  in  the Netherlands,  Ireland  and  Canada  through
acquisitions at attractive prices.'

'Our  pre-tax operating profit, including life achieved operating  profits,
but before goodwill amortisation and exceptional items, amounted to £1,114m
compared with £1,298m last year, which included a one-off benefit of  £235m
to life achieved operating profits.  On a modified statutory basis the pre-
tax operating profit amounted to £771m (1998 £775m).'

'Life and savings showed a strong increase in new business sales of 33%  to
£7,094m,  with the value of life new business increasing by 46%  to £257m.
Strong   new   business  growth  was  achieved  throughout  our   principal
operations.   In  particular, Poland performed exceptionally  well  in  the
newly  privatised pensions market and the UK produced strong growth in  its
first  full year after the merger. Achieved life operating profits amounted
to  £891m  compared  with £1,021m last year, which  included  the  one-off
benefit  of £235m. Excluding this there was an underlying increase of  15%.
On  a  modified statutory basis, life profits increased to £548m from £498m
last year.'

'General  insurance  underwriting results are starting  to  benefit  from
actions  taken  to improve profitability and there was a £111m  improvement
although progress was held back by claims of £70m from the severe storms in
Continental Europe at the end of December.  Longer term investment  returns
were lower and general insurance profits amounted to £459m (1998 £482m).'

'Following an extensive review we have concluded that despite the scale and
strength of our US general insurance business and its attractive portfolio
of personal and small commercial lines business, it will not be possible to
reach a leading position, without a substantial level of investment,
particularly in view of the likely consolidation in a fragmented market.
We have therefore decided to dispose of our US general insurance business
and have appointed Goldman Sachs in this respect.'

'A  final  dividend  of 23.75p will be declared payable  on  17  May  2000,
resulting in a total dividend for 1999 of 38.0p per share.  This represents
a full year increase of 8%.'

Enquiries:

Bob Scott, Group Chief Executive      Telephone:    [phone]
Peter Foster, Group Finance Director  Telephone:    [phone]


GROUP CHIEF EXECUTIVE'S REVIEW:

Life & savings
1999  was  another  year of dynamic and profitable growth for  our  life 
and savings businesses. Record life sales of £7.1 bn were 33% higher than in
1998, as  new  annual  premiums  rose  by 76% and single  premiums  and
investment products  by  29%.  There was strong growth in the UK, good
performances  in France and the Netherlands, and our Polish business did
exceptionally well in the  new  pensions  market, producing new annual
pensions premiums  totalling £282m in 1999.

The  value  of the new business contribution to life achieved profits,  after
the  cost of capital, increased by 46% to £257m.  In the UK, product  margins
were broadly maintained, although the value of new business was affected by a
change in product mix and lower assumed investment returns.  The value of new
business  more than doubled in Poland following the success in pensions,  and
improved results were also achieved in France and the Netherlands.

Life achieved operating profits amounted to £891m, compared with £1,021m last
year which included a one-off benefit of £235m from an increase in the
assumed margins for the return on equities above fixed interest securities.
Total achieved profits, including investment fluctuations, amounted to
£1,943m (1998 £1,189m).

Modified statutory life profits were up 12% at £548m, after a loss of £15m in 
the Polish pension business reflecting start-up costs.

General insurance
Actions  to improve underwriting results and a cautious stance on  year  2000
risks saw general insurance premiums 1% lower worldwide at £8.6 billion,  and
10%  lower in the United Kingdom.  Rate increases are being applied  in  most
classes  of business in the United Kingdom, and wherever possible around  the
world, including the United States where rate increases are being achieved in
commercial lines.  The group is focused on making further improvements in the
profitability  of  general insurance underwriting and  on  strengthening  its
position in those markets where it can sustain superior returns.

Underwriting  results  improved by £111m and  the  combined  operating  ratio
improved from 110% to 109%, despite claims amounting to £70m from the  severe
storms  that  swept through Continental Europe at the end  of  December.  The
improvement  reflected  management actions,  merger expense  savings  and the
absence of a charge for asbestos and  environmental pollution claims from
business no longer written. The United Kingdom and  the United  States
showed  a better result and Canada produced another strong performance in
soft market conditions.   The general insurance expense ratio reduced to
14.4% (1998 15.0%) benefiting from merger expense savings.  The longer term
investment return was 11% lower at £1,209m, reflecting the effect of lower
interest rates, a cash outflow and the unwinding of the discount on certain
claims provisions.  Overall, general insurance profits for 1999 were £459m
(1998 £482m).

Asset management
Our  asset  management business manages £136bn and ranks  among  the  top  20
European  fund  managers.  During 1999, funds under management  increased  by
£15bn  and  profits from asset management and other financial  services  more
than doubled to £36m. The UK arm of the business re-launched itself as Morley
Fund  Management and had a successful year, as did Victoire Asset  Management
in  France and the Delta Lloyd Nuts Ohra investment funds in the Netherlands.
Our  asset  management  operations around  the  world  are  increasingly  co-
ordinating  their  activities, which will lead  to  further  improvements  in
profitability and help to sustain the good long term investment performance.

Integration and cost savings
Excellent  progress was made during the year following the 1998  merger,  and
the  integration  of  businesses  is largely complete.  The  annualised  cost
savings target of £325m has been achieved six months ahead of schedule. Total
cost  savings  of £222m are reflected in 1999's results, of which  £127m  are
included  in  general  insurance  administrative  expenses,  £62m  in  claims
handling  expenses  and  £33m  in  life,  asset  management  and  unallocated
expenses.

The  one-off costs of achieving these savings of £380m was fully provided for
by a charge of £120m in 1999.  A provision of £31m has been made for the cost
of integration incentive plans.

Developments
During  the  year  our  Netherlands subsidiary, Delta  Lloyd,  completed  the
acquisition  of NUTS OHRA, creating that country's third biggest insurer  and
strengthening  our  distribution capability. The  combined  operation  has  a
leading  position  in  group pension business and a number  two  position  in
direct writing and health insurance.   Cost savings are estimated at £10m per
annum  from 2002.  In Canada, the acquisition of GAN strengthens our position
as  the  country's  largest  general insurer and, in  Ireland,  the  recently
completed  acquisition  of  Hibernian will  make  us  the  country's  leading
composite  insurer.  By integrating CGU's existing Irish business,  estimated
cost savings of £5m per annum are expected to be generated from 2002.

We  are  in  the  final stages of due diligence in respect of  the  strategic
partnership announced in November, with the Royal Bank of Scotland ('RBS') to
develop  and  market  life, pensions and investment products  to  their  2.7m
customers. As part of this agreement, we will be acquiring 50% of their  life
assurance  subsidiary, Royal Scottish Assurance (RSA),  at  a  cost  of  some
£150m, and will provide administration and asset management services to  RSA.
In  addition,  we announced that we would purchase up to £300m  RBS  ordinary
shares  to cement the new relationship and subsequently we agreed to purchase
£900m  of  preference shares.  To date some £170m ordinary shares  have  been
purchased.

We expect to be able to start discussions to acquire 50% of NatWest Life, and 
implement distribution arrangements for life and investment products through
the 1,700 strong NatWest branch network as soon as RBS's offer for National
Westminster Bank plc has been finalised.

We are also progressing discussions with Societe Generale with the intention
of strengthening our position as a leading player in the French long-term
savings market.

The  Group  is focused on generating shareholder value from leading positions
in selected markets.  An ongoing review of smaller businesses has to date led
to  a  number  of  disposals.  These included the Swedish  general  insurance
business, the life reinsurance portfolio of British & European in the  United
Kingdom and the planned sale of our Greek life business.

E-commerce
The Group has a number of initiatives underway to benefit from e-commerce and
new  technologies.  In the business to business sector, we are using internet
technology with intermediaries to cut costs and improve the speed of customer
service.

The  Group  is  also  beginning to sell simpler insurance products  over  the
internet,  including  motor, household, travel and protection  products.   As
well  as  looking  at the internet, CGU Life in the United Kingdom  are  also
piloting  the  use  of video call centres, enabling customers  through  cable
television to deal directly with CGU from the comfort of their homes.

We   are   also  investigating  new  e-commerce  models.   Through  bluecycle
(www.bluecycle.com), we are seeking to generate greater value from auctioning
UK  insurance  salvage on the internet.  Since its launch  in  January  2000,
bluecycle has signed up around 50,000 customers.

We  are  also aiming to become one of the leading online home portals in  the
United  Kingdom, where we see opportunities to market services  in  the  home
movers  market.   We  acquired UK Property Gold  as  a  development  platform
(www.ukpg.co.uk) and will launch the business this spring.

Year 2000 ('Y2K') and the euro
Total  Y2K  IT  costs were £135m with £41m included in 1999's  results.   Our
businesses  in the euro zone are continuing to work actively to  prepare  for
the final conversion. Costs incurred to date for the introduction of the euro
amount  to  £35m, with £15m included in 1999's results.   The expected  total
cost of readying our systems for the euro is some £70m, excluding the UK.

For some time, CGU had introduced exclusion clauses to minimise the effect of
claims  arising  from  the  foreseeable effect of the  Millennium  Bug.  This
limited  claims  to an insignificant amount.  Our own systems  were  free  of
problems at the turn of the year.

Shareholders' funds
Shareholders' funds amounted to £9,567m (31 Dec 1998 £9,039m) after deducting
the equalisation provision of £134m (31 Dec 1998 £114m).

Return on equity (ROE)
The  group's 'normalised' after tax return on equity for the 12 months to  31
December 1999 was 8% (5 year average 14%). The normalised return is based  on
the  after  tax operating profits including life achieved operating  profits,
before  exceptional items and goodwill amortisation, and the  opening  equity
capital.  The  total return on equity, including all investment and  currency
movements during 1999, amounted to 11% and over the 5 years averaged 19%  per
annum.

In  the  general  insurance business alone, over the 5 years to  31  December
1999,  the normalised ROE excluding business no longer written, averaged  10%
per annum, including a return of 13% from UK general insurance operations.

During the year we introduced a system of measuring each of our main Business
Units   and  incentivising  senior  management  using  economic  value  added
principles to increase the focus on the creation of shareholder value.
                                      * * *

In a separate release made today CGU plc and Norwich Union plc announced that
they have agreed the terms of a merger of the two companies.

                                      * * *

               Performance highlights
               including life achieved profits
     1999                                            1999            1998
Unaudited                                       Unaudited       Unaudited
   Euro m                                              £m             £m
               Revenues
   13,416      Life premiums                        8,826           6,952
    1,170      Investment sales                       770             602
      342      Health premiums                        225             123
  -------                                          ------          ------
   14,928                                           9,821           7,677
   13,104      General insurance premiums           8,621           8,649
  -------                                          ------          ------
   28,032      Total                               18,442          16,326
  -------                                          ------          ------
               Operating profit                                  
               Life achieved operating profits
               before 1998 equity return
    1,354      adjustment                             891             786
        -      Equity return adjustment (ii)            -             235
  -------                                          ------          ------
    1,354                                             891           1,021
       36      Health                                  24              22
      698      General insurance                      459             482
       15      Associated undertakings                 10              14
               Asset management/other
       55      financial services                      36              14
  -------                                          ------          ------
    2,158                                           1,420           1,553
               Unallocated expenses and
     (465)     interest charges                      (306)           (255)
  -------                                          ------          ------
               Pre-tax operating profit before                   
               goodwill amortisation and
    1,693      exceptional items                    1,114           1,298
               Taxation, minorities and
     (517)     preference dividends                  (340)           (422)
  -------                                          ------          ------
               Operating profit before goodwill
               amortisation and exceptional
               items, after taxation, 
               attributable to equity
    1,176      shareholders                           774             876
  -------     ------------------------------       ------          ------
     89.7c     Per share (iii)                      59.0p           67.5p
  -------     ------------------------------       ------          ------
  
              Reconciliation to modified
      1999    statutory operating profit               1999             1998
 Unaudited                                        Unaudited        Unaudited
    Euro m                                               £m               £m
              Pre-tax operating profit,
              including life achieved profits,
              before goodwill amortisation and
     1,693    exceptional items                       1,114            1,298
    (1,354)   Deduct life achieved profits             (891)          (1,021)

              Add modified statutory life
       833    profits                                   548              498
   -------                                           ------           ------
              Pre-tax operating profit,
              including modified statutory
              life profits, before goodwill
              amortisation and exceptional
     1,172    items                                    771              775
       (29)   Goodwill amortisation                    (19)              (7)
   -------                                          ------           ------
              Pre-tax operating profit before
     1,143    exceptional items                        752              768 
      (230)   Exceptional items                       (151)            (610)
   -------                                          ------           ------
       913    Operating profit before taxation         601              158
   =======                                          ======           ======

Notes
(i)   Unaudited financial statements follow on page 21.
(ii)  The one-off adjustment resulted from an increase in the assumed
      margins for the return on equities above fixed interest securities.
(iii) Per share workings on page 20.

                              NOTES TO EDITORS

*   CGU  is Europe's 5th largest insurance group and the largest in the  UK
    (based on worldwide sales).

*   CGU  is one of the top 20 European fund managers, with worldwide assets
    and  additional funds under management of £136 billion at  31  December
    1999.

*   In  1999,  total  life premiums, investment sales and  health  premiums
    accounted for 53% of the group's total business.

*   The  distribution  of  total  premiums and investment  sales  of  £18.4
    billion for 1999 was as follows:

                                Life,
                           investment
                            sales and    General       Total
                               health
                                    %          %           %
     -------------------------------------------------------
     UK                            24         14          38
     France                        12          4          16
     Netherlands                    5          2           7
     Other Europe                  10          4          14
     United States                  2         14          16
     Canada                         -          4           4
     Australia & NZ                 -          3           3
     Rest of  World                 -          2           2
     -------------------------------------------------------
*    All growth rates are quoted in local currency.

*    Overseas currency results are translated at average exchange rates.

*    CGU's corporate press releases and results presentations are available
     on the Internet:  www.cgugroup.com/group


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