Interim Results - Part 2
CGU PLC
11 August 1999
Part 2
CGU plc
STATISTICAL APPENDIX - ISSUED 11 AUGUST 1999
UNAUDITED GROUP RESULTS FOR 6 MONTHS ENDED 30 JUNE 1999
All results in the statistical appendix are before merger integration costs
6 months to 30 June 3 months to 30 June
1999 1998 1998 1999 1998
at at at at at
average average average average average
1999 roe 1999 roe 1998 roe 1999 roe 1999 roe
OPERATING PROFIT £m £m £m £m £m
Life assurance
UK 122 107 107 62 53
France 45 43 42 23 23
Netherlands 63 63 61 31 30
Other Europe 14 6 7 7 6
United States 8 6 6 4 4
Canada 1 2 2 1 1
Rest of World (3) 1 1 (1) 1
--- --- --- --- ---
250 228 226 127 118
=== === === === ===
General insurance
UK 48 71 71 32 35
France 26 29 28 24 17
Netherlands 21 29 29 10 16
Other Europe 7 12 12 7 8
United States 102 50 49 40 17
Canada 38 27 27 28 35
Australia & NZ 12 23 23 3 17
Rest of World 16 13 15 11 7
Group reinsurance 17 15 15 13 11
--- --- --- --- ---
287 269 269 168 163
=== === === === ===
Associated undertakings
UK 3 2 2 1 2
France 1 2 2 (1) 1
Other Europe 4 1 1 2 1
Rest of World - 1 1 - -
--- --- --- --- ---
8 6 6 2 4
=== === === === ===
Asset management/
other financial services
UK 7 - - 3 1
France 4 2 2 3 1
Netherlands 5 5 5 1 2
Other Europe 1 5 5 1 4
--- --- --- --- ---
17 12 12 8 8
=== === === === ===
Operating profit
UK 180 180 180 98 91
France 76 76 74 49 42
Netherlands 89 97 95 42 48
Other Europe 26 24 25 17 19
United States 110 56 55 44 21
Canada 39 29 29 29 36
Australia & NZ 12 23 23 3 17
Rest of World 13 15 17 10 8
Group reinsurance 17 15 15 13 11
--- --- --- --- ---
562 515 513 305 293
Unallocated expenses (38) (30) (30) (20) (17)
Unallocated interest
charges - external (33) (38) (38) (18) (20)
- intra-group (61) (45) (45) (30) (22)
Goodwill amortisation (10) (1) (1) (5) (1)
--- --- --- --- ---
Pre-tax operating
profit before merger
integration costs 420 401 399 232 233
=== === === === ===
GROUP GENERAL INSURANCE RESULTS
6 months to 30 June 3 months to 30 June
1999 1998 1998 1999 1998
at at at at at
average average average average average
1999 roe 1999 roe 1998 roe 1999 roe 1999 roe
£m £m £m £m £m
Underwriting result
UK (137) (158) (158) (59) (82)
France (19) (14) (14) (4) (6)
Netherlands (10) (4) (4) (4) (1)
Other Europe (31) (21) (20) (13) (8)
United States (89) (145) (141) (56) (80)
Canada (18) (29) (30) - 7
Australia & NZ (22) (15) (15) (14) -
Rest of World (10) (14) (15) (4) (7)
Group reinsurance - (8) (8) 4 (1)
----- ----- ----- ----- -----
(336) (408) (405) (150) (178)
===== ===== ===== ===== =====
Longer term
investment return (LTIR)
UK 185 229 229 91 117
France 45 43 42 28 23
Netherlands 31 33 33 14 17
Other Europe 38 33 32 20 16
United States 191 195 190 96 97
Canada 56 56 57 28 28
Australia & NZ 34 38 38 17 17
Rest of World 26 27 30 15 14
Group reinsurance 17 23 23 9 12
--- --- --- --- ---
623 677 674 318 341
=== === === === ===
General insurance result
UK 48 71 71 32 35
France 26 29 28 24 17
Netherlands 21 29 29 10 16
Other Europe 7 12 12 7 8
United States 102 50 49 40 17
Canada 38 27 27 28 35
Australia & NZ 12 23 23 3 17
Rest of World 16 13 15 11 7
Group reinsurance 17 15 15 13 11
--- --- --- --- ---
287 269 269 168 163
=== === === === ===
Note:
Investment income, which is included in the longer term investment
return is analysed below.
6 months to 30 June 3 months to 30 June
1999 1998 1998 1999 1998
at at at at at
average average average average average
1999 roe 1999 roe 1998 roe 1999 roe 1999 roe
£m £m £m £m £m
Investment income
UK 157 195 195 82 100
France 28 27 26 20 16
Netherlands 18 17 17 8 8
Other Europe 30 29 28 16 16
United States 149 158 154 75 79
Canada 52 51 52 26 25
Australia & NZ 29 36 36 14 17
Rest of World 20 22 25 11 12
Group reinsurance 15 22 22 8 11
----- ----- ----- ----- -----
498 557 555 260 284
===== ===== ===== ===== =====
Worldwide Life & Savings New Business - 6 months to 30 June
New single premiums New annual premiums Investment products
Local Local Local
6 months currency 6 months currency 6 months currency
1999 1998 growth 1999 1998 growth 1999 1998 growth
£m £m % £m £m % £m £m %
UK
Individual
pensions 202 163 24 33 29 14
Group pensions 182 149 22 22 23 (4)
Mortgage - - - 18 24 (25)
Other life 951 697 36 9 11 (18)
PEPs/ISAs/
Unit Trusts - - - - - - 427 264 62
----- ----- --- --- --- --- --- --- ---
1,335 1,009 32 82 87 (6) 427 264 62
France
AFER (excl.
unit-linked) 351 207 66 - - -
Unit-linked
& other
savings 226 266 (17) 6 5 13
Group
protection
business 75 70 5 1 1 -
--- --- --- --- -- --
652 543 17 7 6 11
Netherlands
Individual
pensions 41 51 (21) - - -
Group pensions 88 41 114 9 6 49
Universal life 8 8 2 8 6 36
Other
individual
life 24 42 (46) 18 17 (2)
Group life 6 5 19 3 2 46
--- --- --- --- --- ---
167 147 11 38 31 19
Italy
Unit-linked 538 456 15 15 6 155
Savings,
protection
& other 77 32 134 21 23 (11)
--- --- --- --- --- ---
615 488 23 36 29 23
Poland
Life &
savings 6 3 119 32 30 18
Pensions - - - 2 - n/a
--- --- --- --- --- ---
6 3 119 34 30 24
Germany
Life &
savings 17 - n/a 7 1 n/a
Pensions &
annuities 50 - n/a 8 - n/a
--- --- --- --- --- ---
67 - n/a 15 1 n/a
Other Europe
Life &
pensions 74 29 148 5 4 29
UCITS (ii) - - - - - - 56 68 (21)
--- --- --- -- -- -- -- -- ----
74 29 148 5 4 29 56 68 (21)
United States
Life
assurance 4 4 (3) 5 7 (30)
Pensions &
annuities 85 83 - 6 5 -
--- --- -- -- -- --
89 87 - 11 12 (10)
Other 14 13 7 11 6 88
----- ----- -- --- --- --- --- --- ---
Total 3,019 2,319 28 239 206 17 483 332 44
===== ===== == === === === === === ===
Notes:
(i) Average exchange rates used and premiums are gross of reassurance.
(ii) UCITS are collective investments sold throughout Europe and Asia.
(iii) 1998 figures exclude sales from discontinued business.
GENERAL INSURANCE ANALYSIS BY TERRITORY
UNITED KINGDOM
General insurance
6 months to 30 June
Premium income Underwriting result Operating ratio
1999 1998 Growth 1999 1998 1999 1998
£m £m % £m £m % %
Personal
Motor 256 263 (3) (48) (41) 119 116
Homeowners 301 276 9 11 (16) 96 106
Other 75 140 (46) 12 20 109 83
---- ---- ---- ----
632 679 (7) (25) (37) 105 105
Commercial
Motor 168 179 (6) (51) (43) 132 125
Property 228 273 (16) (8) (23) 103 108
Liability 135 165 (19) (42) (42) 131 127
Other 103 122 (16) 5 5 94 95
---- ---- ----- -----
634 739 (14) (96) (103) 115 114
---- ---- ----- -----
Total 1266 1418 (11) (121) (140) 110 110
London market 100 131 (24) (16) (18) 113 115
---- ---- ----- -----
Total 1366 1549 (12) (137) (158) 110 110
==== ==== ===== =====
Underwriting ratios
1999 1998
% %
Claims 81 82
Commission 16 15
Expenses 13 13
--- ---
110 110
=== ===
UNITED KINGDOM
General insurance
3 months to 30 June
Premium income Underwriting result Operating ratio
1999 1998 Growth 1999 1998 1999 1998
£m £m % £m £m % %
Personal
Motor 126 139 (9) (19) (22) 115 117
Homeowners 148 134 11 18 2 88 99
Other 35 70 (49) 2 9 120 86
--- --- --- ---
309 343 (10) 1 (11) 102 103
Commercial
Motor 81 85 (5) (19) (26) 124 132
Property 107 136 (21) (10) (8) 109 106
Liability 64 77 (18) (21) (27) 133 136
Other 51 61 (16) 4 (1) 91 100
--- --- --- ---
303 359 (16) (46) (62) 115 118
--- --- --- ---
Total 612 702 (13) (45) (73) 108 110
London market 44 57 (22) (14) (9) 132 119
--- --- --- ---
Total 656 759 (13) (59) (82) 110 111
=== === === ===
Underwriting ratios
1999 1998
% %
Claims 79 82
Commission 17 15
Expenses 14 14
--- ---
110 111
=== ===
FRANCE
General insurance
6 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
FFrm FFrm % FFrm FFrm % %
Agents/brokers
Property 1542 1565 (1) (37) (5) 99 96
Motor 1238 1152 8 (49) (56) 103 104
Health 590 568 4 49 32 89 93
Other 596 508 18 (41) (51) 108 110
---- ---- ----- -----
3966 3793 5 (78) (80) 100 100
Direct 233 126 84 (107) (56) 148 142
---- ---- ----- ---
Total 4199 3919 7 (185) (136) 103 101
==== ==== ===== ===
3 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
FFrm FFrm % FFrm FFrm % %
Agents/brokers
Property 535 534 - (8) 9 108 103
Motor 537 476 13 (13) (44) 103 110
Health 262 245 7 24 22 92 93
Other 176 186 (5) (10) (27) 112 122
---- ---- ----- ----
1510 1441 5 (7) (40) 104 106
Direct 147 66 120 (33) (22) 121 129
---- ---- ----- ---
Total 1657 1507 10 (40) (62) 105 107
==== ==== ===== ===
Underwriting ratios
6 months to 3 months to
30 June 30 June
1999 1998 1999 1998
% % % %
Claims 71 68 69 66
Commission 18 19 19 22
Expenses 14 14 17 19
--- --- --- ---
Operating 103 101 105 107
=== === === ===
NETHERLANDS
General insurance
6 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
Flm Flm % Flm Flm % %
Domestic 84 82 3 2 8 96 88
Motor 214 201 6 (50) (13) 125 106
Commercial fire 138 138 - 10 (3) 88 99
Liability 69 67 3 (9) (14) 115 129
Personal accident 95 77 22 7 4 85 86
Inward reinsurance 18 18 3 (2) (3) 111 118
Other 92 87 6 8 9 88 87
--- --- --- ---
Total 710 670 6 (34) (12) 103 100
=== === === ===
3 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
Flm Flm % Flm Flm % %
Domestic 42 42 - (1) 2 101 95
Motor 114 108 6 (30) (9) 131 110
Commercial fire 73 77 (5) 9 - 84 96
Liability 32 31 3 (7) (4) 128 114
Personal accident 27 25 9 8 1 83 102
Inward reinsurance 7 8 (3) (2) - 120 106
Other 50 46 9 8 6 84 87
--- --- ---- ---
Total 345 337 2 (15) (4) 105 101
=== === ==== ===
Underwriting ratios
6 months to 3 months to
30 June 30 June
1999 1998 1999 1998
% % % %
Claims 70 67 70 66
Commission 22 23 24 25
Expenses 11 10 11 10
--- --- --- ---
Operating 103 100 105 101
=== === === ===
UNITED STATES
General insurance
Statutory Basis
6 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
$m $m % $m $m % %
Personal
Automobile 697 679 3 (2) (46) 98 105
Homeowners 208 216 (4) (25) (39) 113 118
Other 66 53 26 9 5 84 90
---- ---- --- ---
971 948 2 (18) (80) 101 107
Commercial
Automobile 280 279 - (31) (45) 110 115
Property 506 512 (1) (95) (72) 119 112
Liability 94 103 (9) (17) (11) 117 109
Workers'
compensation 229 212 8 7 1 94 97
Other 64 59 9 11 (31) 91 n/a
---- ---- ----- -----
1173 1165 1 (125) (158) 110 112
---- ---- ----- -----
Total 2144 2113 1 (143) (238) 106 110
==== ==== ===== =====
Underwriting ratios
1999 1998
% %
Claims 76 79
Commission 16 17
Expenses 14 14
--- ---
106 110
=== ===
UNITED STATES
General insurance
Statutory Basis
3 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
$m $m % $m $m % %
Personal
Automobile 348 343 1 (8) (23) 101 105
Homeowners 113 120 (5) (17) (26) 115 121
Other 38 28 35 4 1 86 92
--- --- --- ---
499 491 2 (21) (48) 103 108
Commercial
Automobile 137 138 (1) (20) (34) 114 124
Property 257 260 (1) (63) (37) 124 112
Liability 43 51 (16) (15) (4) 134 108
Workers'
compensation 103 106 (3) 12 (1) 89 99
Other 38 35 8 13 (17) 67 n/a
--- --- --- ---
578 590 (2) (73) (93) 113 115
---- ---- ----- -----
Total 1077 1081 - (94) (141) 108 112
==== ==== ===== =====
Underwriting ratios
1999 1998
% %
Claims 78 82
Commission 17 17
Expenses 13 13
--- ---
108 112
=== ===
CANADA
General insurance
6 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
C$m C$m % C$m C$m % %
Automobile 566 603 (6) (7) 3 101 99
Property 283 303 (7) (14) (39) 105 113
Liability 68 87 (21) (25) (19) 134 121
Other 16 17 (7) 3 6 73 67
---- ---- ---- ----
Total 933 1010 (8) (43) (49) 104 105
==== ==== ==== ====
3 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
C$m C$m % C$m C$m % %
Automobile 323 346 (6) 7 21 97 94
Property 161 173 (7) 6 13 95 86
Liability 36 41 (11) (15) (11) 141 131
Other 8 9 (7) 1 5 80 50
--- --- ---- ---
Total 528 569 (7) (1) 28 99 94
=== === ==== ===
Underwriting ratios
6 months to 3 months to
30 June 30 June
1999 1998 1999 1998
% % % %
Claims 72 74 69 64
Commission 19 18 18 18
Expenses 13 13 12 12
--- --- --- ---
104 105 99 94
=== === === ===
Note: CGI integration costs of C$22m are excluded from the 6 months
1998 figures.
AUSTRALIA & NZ
General insurance
6 months to 30 June
Note: All figures are at 6 months to 30 June 1999 average rates of exchange.
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
£m £m % £m £m % %
Australia 221 219 1 (27) (19) 114 109
New Zealand 54 52 4 5 4 86 92
--- --- ---- ----
275 271 2 (22) (15) 109 106
=== === ==== ====
3 months to 30 June
Underwriting Operating
Premium income result ratio
1999 1998 Growth 1999 1998 1999 1998
£m £m % £m £m % %
Australia 113 111 2 (19) (2) 120 102
New Zealand 30 28 10 5 2 72 90
--- --- ---- ---
143 139 3 (14) - 111 100
=== === ==== ===
Underwriting ratios
6 months to 3 months to
30 June 30 June
1999 1998 1999 1998
% % % %
Claims 81 76 83 70
Commission 14 14 14 15
Expenses 14 16 14 15
--- --- --- ---
109 106 111 100
=== === === ===
ANALYSIS OF EMBEDDED VALUE AND ACHIEVED PROFITS METHODOLOGY AND ASSUMPTIONS
Analysis of embedded value
6 months 6 months 12 months
1999 1998 1998
Restated
£m £m £m
UK 1,957 1,970 1,935
France 858 880 871
Netherlands 1,641 1,452 1,530
Other Europe 330 170 324
Other 234 248 208
Total 5,020 4,720 4,868
Note: The 6 months 1998 figures have been restated to exclude the effect of
smoothing.
Achieved profits methodology and assumptions
The results have been prepared in accordance with the draft 'Guidance on
Accounting for Long Term Insurance Business' in the Group Accounts of
Proprietary Companies (The Achieved Profits Method) issued by the ABI and
are prepared as a supplement to the statutory basis results contained in
this report.
For the purpose of producing interim results, the methodology is based on
rolling forward the embedded value published at 1998 year-end. Changes in
new business, interest rates and investment returns are reflected each
quarter, whereas non-economic parameters such as persistency and expenses
are normally only adjusted annually in the year end results.
Although the group's life and savings business is predominantly long term it
also includes substantial businesses such as service companies. Accounting
for these businesses continues to be on the traditional method.
The key economic assumptions are listed below:
United Kingdom France Netherlands
6 months 6 months 6 months 6 months 6 months 6 months
1999 1999 1999 1999 1999 1999
Embedded Operating Embedded Operating Embedded Operating
value profit value profit value profit
% % % % % %
Risk margin 4.0 * 4.0 * 5.2 5.2 4.5 4.5
After tax 4.1 3.3 2.8 2.3 3.1 2.6
discount rate
(excluding risk
margin)
Risk discount 8.3 * 7.4 * 8.1 7.7 7.7 7.2
rate
Pre-tax investment
returns:
Government 5.3 4.4 4.6 3.9 4.7 3.9
fixed interest
securities
Ordinary shares 7.8 6.9 6.6 5.9 7.5 6.8
Property 6.3 5.4 5.6 4.9 5.6 4.9
Future expense 3.7 3.0 2.5 2.5 2.5 2.5
inflation
Tax rate for 30.0 40.0 25.0
grossing up
profits and
new business
contribution
* For unit linked business, the risk margin is 4.7%
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