CU Poland group 2006 financial results – the best for years

• A year of very good financial results and dynamic sales growth for the Commercial Union group
• Assets managed by CU group have increased 30% to 46 billion zlotys
• 35,610 life insurance claims; excellent life fund results and the highest new sales of CU Life for seven years
• CU Pension Fund as the best pension fund in Central and Eastern Europe – Investment & Pensions Europe monthly magazine award
• CU General: payment of 4,400 claims for individual clients and 787 for companies; increase of contributions by over 30%
• Record sales of CU unit trusts; introduction of an “umbrella” fund
• Commercial Union the second ranked financial brand in Poland in Premium Brand the first brand reputation survey.

Commercial Union Poland Life Insurance Company
In 2006, CU Life paid out 35,610 claims from life insurance and additional contracts (32,195 in previous year). The highest individual insurance payment was over 603,000 zlotys and the record payment from group insurance was 500,000 zlotys. An interesting example is the payment of a total sum of 792,000 zlotys after the death of one person who had 14 separate life polices. Payments made out of additional options, particularly accident and health polices, are also very significant for customers. The average claim payment time is 14 days.

"Receipt of claim payments, which are a very significant help for our customers and their loved ones, at difficult times of life, is one of two benefits customers gain from our business. The second one is the growth of capital entrusted to us within the framework of individual and group life insurance, group pension programmes and individual pension accounts. We can be proud of excellent results of our life funds, managed by experts from CU Investment Management," says Zbigniew Andrzejewski, chief executive of CU Poland group and CU Life. Dynamic Fund and CU Equity Funds again achieved the best results on the market over three and five years.

In 2006 CU Life has written almost 2.5 billion zlotys of gross premium, 29% more than a year ago, retaining second place in the market. "New sales were the best for seven years, 77% higher than 2005," emphasises Zbigniew Andrzejewski. Record sales of single premium policies was one source of this expansion. In addition, income from policies with regular premium, including group insurance, was higher. There is also dynamic sales growth in bancassurance, first of all thanks to co-operation with the Polish arm of Deutsche Bank PBC and Bank Zachodni WBK, a member of AIB group, and a minority shareholder of CU Life.

"Higher than expected sales of an improved version of our hospital cash benefit (Your Health) is also a significant success," adds Zbigniew Andrzejewski. CU Life remains the market leader for individual life insurance and premiums paid into life funds.

Assets under management, which is becoming a more significant measure of participation in the life insurance market, have increased by 21%, exceeding 12.4 billion zlotys. Increasing insurance awareness and improving economy and employment market contributed to a decrease in the amount of early policy surrenders. "Excellent sales and investment results, with very moderate cost increases, allowed another year end with a satisfactory profit," summarises Zbigniew Andrzejewski.

Item	2006 (mln zlotys)	2005 (mln zlotys)	Change (%)
Gross premium written	2,452	1,897	29
Total assets	12,550	10,339	21
Claims and surrenders	994	850	17
Acquisition costs	188	174	8
Administration costs	128	124	3
Technical results	360	348	3
Gross financial results	480	431	11
Net financial results	420	367	14
Equity capital	1,102	1,061	4
Gross technical and insurance provisions	11,181	9,094	23
Investments	12,408	10,228	21

Commercial Union Lithuania Life Insurance Company
In 2006 CU Lithuania increased gross premium written by 48% compared to the previous year, retaining third place in the market by new sales, and fourth place by gross premium written (10.7%). CU Lithuania is also in third position managing pension funds (market share 11.5%). 2006 is the first full year ended with a net profit.

CU Lithuania has been operating since autumn 2001 using Polish know-how and logistical support. CU Poland Life is the sole shareholder of the Lithuanian company, which offers life insurance and manages second-pillar pension funds.

Item	2006 (mln LTL*)	2005 (mln LTL)	Change (%)
Gross premium written	48.5	32.7	48
Claims and surrenders	2.4	2.1	14
Acquisition costs	9.0	7.2	25
Operational costs	11.1	10.8	3
Net financial results	2.2	-1.9	216

* 1 LTL = 1,11 zlotys (average rate of NBP on 31 December 2006)

Commercial Union Pension Fund Company
In November 2006 Investment & Pensions Europe, a prestigious monthly magazine, recognised CU as the best pension fund in Central and Eastern Europe for pioneering efforts to promote corporate governance standards on the Polish capital market. In 2006 the fund earned for customers almost 3.9 billion zlotys profit from investments. The annual rate of return was 15.5% with inflation of 1.4%. CU is the pension fund with the highest average value of assets accumulated in individual client accounts.

Commercial Union Pension Fund Company, which manages Poland’s largest pension fund, (assets exceeded 30 billion zlotys in autumn 2006), has operated very effectively for another year, which is reflected in the achieved results. The increase in scale of operations (more customers, higher assets) is reflected in growing sales revenues which exceeded 324 million zlotys. The company ended the year with a net profit of 154.5 million zlotys.

"The economies of scale affect also fund clients as costs paid by them are among the lowest in our industry. Our customers have the highest average account value on the market, and this value increased by almost 29% within the last year. We focus on acquiring customers who choose their pension fund for the first time and we have invested in modern forms of customer contact, such as internet and text messaging," says Piotr Szczepiórkowski, general manager of Commercial Union Pension Fund Company.

Item	2006 (mln zlotys)	2005 (mln zlotys)	Change (%)
Sales revenue	324.1	272.8	19
Costs of pension fund management (a+b+c) including:	142.6	128.9	11
a) obligatory charges *	73.4	66.5	10
b) transfer agent costs	23.9	23.7	1
c) other costs	45.3	38.7	17
Result from operational activity	175.5	139.5	26
Investment result	15.4	22.7	-32
Net financial results	154.5	131.3	18

Data in the format used by the Polish regulator.

* Item includes costs of State Social Security Agency commission, payments to the regulator and Insured’s Ombudsman and payments into additional and basic part of Guarantee Fund.

Commercial Union Poland General Insurance Company
In 2006 CU General paid out almost 4,400 claims for individual customers totalling over 9 million zlotys. The highest number of claims paid was from home insurance – over 2,500. "The most persuasive argument for insurance is a quickly paid claim after a flood, fire, robbery or flooded dwelling. Following the hurricane which hit Poland on 18 and 19 January this year, in a short period of time we received ten times more house insurance claims than usual. We did our best to pay out money to injured parties as fast as possible and almost 100% of cases have already been settled," underlines Anna Katarzyna Wojciechowska, general manager of CU General. In the commercial insurance department (for companies) during the last year CU TUO paid out 787 settlements for a total amount of almost 8.5 million zlotys.

"Each payment helps an entrepreneur with machine failure, building damage, flooding, carrier error or damage of goods in marine transport," says president Wojciechowska.

In 2006 CU General collected 103 million zlotys of gross premiums, more than 31% over last year. For the first time, the majority (almost 55%) of premiums were written from personal lines insurance where sales e increased by 60% compared to 2005. "The growth is mainly thanks to our home insurance products Locum Apartment and Locum Residence, which we regard as the best products on the market for demanding customers," explains Anna Katarzyna Wojciechowska.

There has been a significant increase in premiums from bancassurance as a result of growing sales of credit card and cash loans insurance in co-operation with Bank Zachodni WBK, a minority shareholder of CU General. Commercial lines insurance, offered to companies, brought 6% more premium than last year which is a significant achievement in this extremely competitive market segment. "The highest historical technical result, 11 million zlotys, confirms that we are experts in both commercial and personal lines insurance," summarises Wojciechowska.

Item	2006 (mln zlotys)	2005 (mln zlotys)	Change (%)
Gross premium written	103.1	78.4	31.5
Net premium written	59.9	52.1	15.0
Claims paid	16.6	15.0	10.7
Acquisition costs	22.8	20.8	9.6
Administrative costs	14.7	14.2	3.5
Technical result	11.0	10.0	10.0
Net income from investments	4.4	6.5	-32.3
Gross financial results	15.8	17.0	-7.1
Investments	125.9	107.8	16.8
Equity capital	62.8	53.3	17.8
Technical and insurance provisions in ownership share	81.4	61.3	32.8
Surplus of equity capital to cover solvency margin	48.0	44.3	8.4

Commercial Union Poland Unit Trusts Company
In 2006 CU had record sales of its unit trusts since the start of operations and amounted to almost 750 million zlotys gross – two and a half times more than in the previous year. External distributors’ participation in sales exceeded 20% and direct sales (mainly internet) were 10%. The role of CU insurance agents is a dominant one.

"Increase of assets under management by 63% is a good result considering that we have worse access to customers transferring money from bank deposits to unit trusts compared to our main competitors, from capital groups led by banks. Increases of revenues and profits exceeding 40% prove the high efficiency of our company. Good investment results and introduction of an umbrella fund were the most important events last year from our customers’ point of view," emphasises Marek Przybylski, general manager of CU Unit Trusts Company. The company comes 12th in industry league tables by assets with a 1.8% market share.

Item	2006 (mln zlotys)	2005 (mln zlotys)	Change (%)
Sales revenue	46.7	32.0	46
Operational costs	34.0	23.6	44
Gross financial results	14.0	9.9	41
Net financial results	11.3	8.0	41
Net value of assets under management in CU unit trusts	1,794.2	1,096.1	63

-ends-

Information:
Bohdan Bialorucki
Telephone: +48 22 557 43 41
E-mail: bohdan_bialorucki@cu.com.pl
For further information, see www.cu.com.pl

Notes to editors:
Aviva is one of the leading providers of life and pensions to Europe with substantial positions in other markets around the world, making it the world’s fifth largest insurance group based on gross worldwide premiums at 31 December 2005.

Aviva’s principal business activities are long-term savings, fund management and general insurance, with worldwide total sales of Ł41.5 billion and assets under management of Ł364 billion at 31 December 2006.