CGNU UK Life Presentation
CGNU PLC
8 March 2002
Presentation to investors and analysts on CGNU's UK life business
Norwich Union Life, CGNU plc's UK life business, will hold a presentation
today for investors and analysts. Norwich Union Life is the leading
UK life insurer with a market share of over 11% and new business premiums
in excess £8 billion in 2001. In total, the business accounted for 36% of
the Group's ongoing net written premiums in 2001.
Philip Scott, Chief Executive Norwich Union Life commented:
'Our multi-channel, multi-product strategy and our proven abilities in
change management have helped us create the market leader in the UK life
market. These, together with our brand and financial strength leave us
well positioned to continue to lead the UK market through the significant
changes ahead.
'Our target is for a market share of some 15% by the end of 2005
(2001: over 11%). Our relationships and product breadth will see us benefit
from the de-polarisation expected.
'Sales through our joint venture with The Royal Bank of Scotland Group
(RBSG) continue to gain momentum following a strong start to 2002. We have
agreed in principle to extend the RBSG joint venture to include Collective
Investments from early 2003.
'With an Inherited Estate estimated at £5 billion and a strong flow of
in-force profits, we have the financial and capital strength to support this
growth, and generate significant value for shareholders.'
Slides from the presentation will be available on the Group's website
www.cgnugroup.com at 11.00am (GMT) on 8 March. In addition, a webcast will
be available later the same afternoon.
Enquiries:
Investors / analysts
Steve Riley, Investor Relations Director +44 (0)20 7662 8115
Media
Hayley Stimpson, Head of External Affairs +44 (0)20 7662 7544
Alex Child-Villiers, Financial Dynamics +44 (0)20 7269 7107
Notes to Editors:
CGNU is the world's seventh-largest insurance group and the largest insurer
in the UK. It has worldwide premium and investment sales from ongoing
business of more than £28 billion, and over £200 billion in assets under
management at 31 December 2001.
The most recent financial reports are available on the Group's website,
www.cgnu-group.com
Key points from the presentation:-
The UK Market - leadership through change
* Regulatory change and industry reviews will result in significant change
in the UK life industry
* £27 billion annual savings gap identified in the UK
* As the overall market expands, our target is a market share of 15% by
the end of 2005
Strategy for growth
* We have leading market positions in most major life and pensions product
areas including bonds, pensions and individual annuities
* We have established the leading position in the emerging stakeholder
market, with a market share of 20%. The majority of the annual savings
gap of £27 billion is in retirement funding
* We will continue to develop these market positions through the power of our
distribution
* Norwich Union has the IFA relationships in place to benefit from the
de-polarisation that is expected later in 2002. We are the lead provider
to each of the top-six IFA companies in the UK and, we believe these
companies are well placed to be the winners in a de-polarised world
* We are the market leader in the provision and utilisation of e-commerce
to IFAs through internal and external portals; e-enablement of distribution
will be key in closing the savings gap as it drives down the cost of
distribution in the market
* Sales through the joint venture with Royal Bank of Scotland Group (RBSG)
totalled £115 million for January and February 2002,
(full year 2001: £480 million), with the newly launched with-profit bond
attracting £50 million in its first four weeks
* At these volumes the joint venture has positive new business added value
* We expect sales to continue to gain momentum
* We have agreed in principle to extend the joint venture to include
Collective Investments from early 2003. A further announcement on this
will follow in due course
* Our refocused direct sales force has almost tripled its productivity in
the last two years to £182,000 annual premium equivalent (APE) per
head and we will look to increase this further as our new, market leading
point of sale technology ('RIO'), is rolled-out
* This technology will also be used through our arrangements with our
building society partners and the sales teams in the NatWest and Royal
Bank of Scotland branches
* De-polarisation will also have a significant impact in the non-IFA market
as multi-ties develop. We are well positioned to lead through this change
by building on the significant partnerships we have in place
* Our extensive product range will allow us to exploit 'product gap-filling'
opportunities with distributors
* The post-tax internal rate of return on total UK life and pensions new
business in 2001 was 17% and, 12% for non-profit business
Wealth Management
* Our Wealth Management business is being integrated into our UK life
business
* We have developed a robust e-business platform for use in both the life
and general insurance business in the UK
* A suite of financial planning tools, a share dealing service and a
supermarket of funds were launched in 2001
* Personal loans were launched early in 2002, and further banking products
backed by RBSG are scheduled for launch later in 2002
* In consolidating these operations we will reduce ongoing annual costs by
£10 million per annum
Value through operational delivery
* An integrated customer service platform is at the core of our business
model
* Continuing investment of some £75 million per annum is planned to enhance
our customer service capability, develop new product propositions and
increase productivity. Investments are assessed against the Group's
target of 10% net real return, as a minimum
* By 2004 our target is to reduce acquisition costs (excluding commission)
from 25% of APE to 19%
* By 2004 our target is to reduce maintenance costs by over 20% from 0.16%
of funds under management* to 0.12%
* Productivity improvements will be driven by our scaleable infrastructure,
continuing investment in process improvement and the full emergence of
merger savings
* We are committed to extending e-processing throughout our business and
expect 14% of new business to be transacted through IFA portals and direct
e-commerce channels in 2002
Financial strength
* The estimated Inherited Estate of £5 billion, 13% of total with-profit
asset shares, demonstrates the financial strength of our with-profit
business. There are no current plans to seek a reattribution of the
Inherited Estate
* On the statutory basis the average Free Asset Ratio** across our three
major Funds is estimated at 8% after allowing for minimum statutory
solvency of approximately 4% and after satisfying the resilience test
requirements
* The capital requirements of 'non-profit' new business (new business strain)
is funded from the release of profit from 'non-profit' in-force business.
We are confident that we have the capital strength to support our growth
plans for new business from Norwich Union Life resources
_______________________________
* Funds under management - the equity component has been normalised to
FTSE All-Share at 31 December 1999
** Free Asset Ratio is measured as (total assets less total liabilities
less minimum solvency margin) / total assets and includes implicit items
of approximately 3.5%
This information is provided by RNS
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