Norwich Union worldwide new long-term savings business figures: three months to 31 March 2000

19 April, 2000

Highlights

• Worldwide new business premiums increased by 69% (in local currency) to £1.2 billion
• UK new business premiums increased by 86% to £882 million
• Worldwide annual premium equivalent* up 58% (in local currency) to £179 million
• UK annual premium equivalent* up 67% to £122 million, a record quarter
• UK Isa, Pep, Oeic and unit trust sales up over 900% in annual premium equivalent* terms
• European annual premium equivalent* growth of 63% (in local currency)

*Annual premium equivalent is total new annual premiums plus 10% of single premiums.

Norwich Union group chief executive Richard Harvey said:

"Norwich Union has again delivered an outstanding increase in new worldwide long-term savings sales for the first three months of 2000. These figures reflect the momentum built up in 1999 and have produced a 69% increase in local currency in new business premiums to £1.2 billion (1999: £698 million).

"An enhanced marketing strategy and our continued investment in the Norwich Union brand have been key contributors in achieving this year-on-year success.

"The promotion of Norwich Union's investment expertise and our support for Cat-standards is also paying off. Sales of Isas in the first quarter considerably outstripped sales of Peps in the equivalent period last year, with Norwich Union being a significant player in the Isa market.

"Further afield, results from our overseas operations reflect an excellent first quarter, with our European operations achieving a growth of 63% in local currency in annual premium equivalent terms. As our overseas operations continue to increase in significance, we look forward to taking advantage of the enhanced distribution opportunities offered by CGU's international operations.

"We are delighted that our Navigator product, excluded from the headline figures, continues to go from strength to strength with growth of 39%."

United Kingdom (up 67%)

New long-term savings business for the first quarter of 2000 achieved 67% growth over the same period in 1999 on an annual premium equivalent basis. Sales reached £122 million annual premium equivalent in a record quarter for Norwich Union (1999: £74 million).

Single premium bond sales of £304 million were up 85% (1999: £164 million), with average daily sales of £4.8 million. This excellent performance reflects the attractiveness of the product range and our continuing strong relationship with IFAs.

Individual pensions sales of £20 million annual premium equivalent were up 43% (1999: £14 million), reflecting increased marketing efforts. Growth in group personal pensions of 38% to £12 million annual premium equivalent (1999: £9 million) is a pleasing performance in difficult conditions, which will prevail until the introduction of stakeholder pensions. Norwich Union is planning to introduce a range of new pensions products during 2000 that embrace stakeholder principles and make further use of new technology. This is part of an ongoing programme of development to ensure optimum positioning for the launch of stakeholder pensions in 2001.

Sales of other group pensions of £16 million annual premium equivalent represent a 129% increase (1999: £7 million). This strong performance results from successes in attracting pooled managed pension funds single premium business of £57 million (1999: £14 million).

Annuity sales of £157 million have increased by 5%, reflecting sales of with-profit annuities of £22 million (1999: nil) and our continuing policy of pricing conventional annuities for profit.

Norwich Union is a leader in the creditor market, with creditor life and disability business contributing £8 million annual premium equivalent, an increase of 167% (1999: £3 million).

New investment funds business has achieved single premium sales of £143 million (1999: £15 million) in the run up to the end of the tax year. The Higher Income Plus fund, part of Norwich Union's Cat-standard ISA range, continues to prove very attractive to investors, attracting £62 million in sales. Over the quarter, UK and European equity fund performance has been outstanding, with the Norwich UK Growth fund ranked as the number one in its sector over the last 3 months.

Europe and International (up 43%)

Norwich Union's annual premium equivalent new business in overseas markets has grown by 43% (in local currency) to £56 million.

• Europe (up 63%)

  Annual premium equivalent of £38 million for our European operations reflects excellent first quarter growth of 63% (in local currency). Single premium new business has increased by 73% to £111 million (in local currency) and regular premium new business by 59% (in local currency) to £27 million.

  Single premium growth has been driven by the Celebration Bond product in Ireland and in France by the 1999 award winning unit linked multi-fund contract. In Ireland, exceptional growth of 79% (in local currency) in single premium sales has been achieved, and early indications are that the recently launched 2000 version of the Celebration Bond will continue this growth. In France, single premium sales were up 61% (in local currency) to £45 million, and future performance is expected to benefit from recently winning a coveted award for the best European Equities Fund in 1999.

  The increase in regular premiums reflects a £9 million contribution from Poland, representing the value of pension policies which have been redirected from the State Scheme, and a 20% growth (in local currency) in Irish pensions sales.

  Late in the first quarter of 2000 we launched Norwich Union International, an offshore life and investment business based in Dublin. This innovative proposition, based on the Navigator concept in Australia offers tax-efficient products to high net worth individuals and has generated significant interest since launch.

• International (up 13%)

  Increased sales of our unit trust and pension products in Australia contributed to an annual premium equivalent growth in International of 13% (in local currency) to £18 million.

  Although not included in the new business figures, Navigator sales in Australia increased by 39% (in local currency) over 1999 to A$424 million, giving total funds under administration of A$5.2 billion. Further benefits from our Portfolio Partners and Paladin acquisitions were demonstrated by a 25% increase (in local currency) in mandate sales to A$288 million.

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Enquiries:

Analysts: Philip Scott, Chief Executive (UK Long-Term Savings) on 01603 683936

Rebecca Burrows, Investor Relations & Corporate Communications Director on 01603 680117

Media: James Duffell or Louise Zucchi on 01603 683820

Notes to editors:

New business figures have been translated at average exchange rates applying for the period.

The new business results cover the period ended 31 March 2000.

Annual premium equivalent (APE) is an industry standard for calculating life, pensions and investments new business levels. It is the total of new regular premiums plus 10% of single premiums.

UNAUDITED Analysis of Worldwide New Business

Analysis of UK long-term savings sales by distribution channel

UK unitised with-profit and unit-linked pension single premiums shown above include NICO rebates of Ł22 million (1999: £8 million).

New business premiums from Europe and International businesses have been translated at the average exchange rates applying for the period. The impact of exchange rate movements in 2000 results in the restatement of the 1999 total regular premiums from £51 million to £49 million and from £647 million to £640 million for total single premiums.