Richard Harvey, Norwich Union's Group Chief Executive, commented: "We have continued to make very good progress during the first half of 1999. Significant investment has been made in our businesses both in the UK and internationally, and strong growth of 37 per cent in worldwide new business has been achieved.
| 6 months to 30.6.99 Łm | 6 months to 30.6.98 Łm | Change % | ||
| Worldwide new business APE* | 193 | 37 | ||
| New business added value (post cost of capital) | 60 | 45 # | 33 | |
| Gross premium income | 3,612 | 2,655 | 36 | |
| Operating earnings before tax** | 380 | 361 # | 5 | |
| Operating earnings per share** | 14.1p | 13.3p | 6 | |
| Interim dividend per share | 4.65p | 4.25p | 9 | |
- UK long-term savings new business up 40 per cent to Ł181 million APE
- All business units reporting improved results
- Funds under management increased by 4 per cent since 31.12.98 to Ł60.2 billion
- Shareholders' funds increased by 3 per cent since 31.12.98 to Ł5.9 billion
Richard Harvey, Norwich Union's Group Chief Executive, commented:
"We have continued to make very good progress during the first half of 1999. Significant investment has been made in our businesses both in the UK and internationally, and strong growth of 37 per cent in worldwide new business has been achieved. More importantly, new business added value, the measure of the expected profits from new business, has increased by 33 per cent. Despite the investment for future profit, current operating earnings before tax have increased a further 5 per cent to Ł380 million, to give a combination of very sound overall business performance.
"In particular, we are delighted by our strong life and investment new business sales, especially in the UK where we have achieved a 40 per cent growth in sales over the first six months of 1999. This excellent result, achieved while maintaining profit margins, has been underpinned by investment in our distribution capability.
"We remain committed to growing our UK and international long-term savings operations where we continue to see increases in earnings in the first half of 1999. In addition to organically growing our existing businesses, we have bought a direct selling long-term savings and protection business in Spain, a top-10 property investment management company in Australia, and have established a leading pensions operation in Poland.
"Our UK general insurance business continues to prosper, having successfully integrated London & Edinburgh. With improved critical mass in our personal lines business we are continuing to build our profitable track record. Our investment in leading edge systems, outstanding claims management and a broad distribution approach continues to see us through challenging market conditions.
"There are short-term challenges to overcome in a fiercely competitive business. In common with the rest of the industry, we must hold down our costs and produce good returns in an environment of low inflation and low interest rates. We are clearly focused on what needs to be achieved."
* 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 per cent of single premiums.
** Operating earnings are reported on the basis of a longer-term rate of investment return, exclude the change in the equalisation provision and are stated before integration costs, amortisation of acquired additional value of in-force long-term business and amortisation of goodwill. # Denotes restated figure.
HIGHLIGHTS
Business growth
- Worldwide new business sales of long-term savings products (life, pensions and investments) rose by 37 per cent to Ł265 million annual premium equivalent.
- Worldwide life and pensions new business added value before cost of capital increased to Ł70 million.
- UK life and pensions sales rose by 36 per cent to Ł169 million annual premium equivalent.
- UK life and pensions new business added value before cost of capital is up 35 per cent at Ł50 million.
- UK margins have been maintained at just under 30 per cent, sustaining growth in volume and profitability.
- Sales through direct channels now account for over 13 per cent of UK Long-Term Savings.
Group
- Worldwide pre-tax technical result* of our insurance operations is up 10 per cent to Ł358 million.
- Operating earnings** growth of 5 per cent to Ł380 million has been suppressed by investment in strategic business initiatives, a lower longer-term investment return outlook and new business strain.
UK Long-Term Savings
- The UK non-profit business pre-tax technical result grew to Ł205 million (30 June 1998: Ł193 million) despite being held back by the expected increase in new business strain and lower long-term investment returns.
- The embedded value of UK long-term business increased to Ł3.7 billion, representing over 60 per cent of the Group's shareholders' funds.
Europe & International
- The European pre-tax life technical result rose to Ł29 million from Ł15 million, while new business sales rose by 11 per cent in local currency terms to Ł51 million annual premium equivalent.
- Navigator, our market-leading master trust product in Australia, has seen sales improve by 30 per cent to A$729 million, bringing total funds to A$3.9 billion. The embedded value of Navigator and our other non-life business in Australia rose to A$161 million. Value added by non-life new funds is A$22 million, a margin of 1.7 per cent.
UK General Insurance
- UK general business operating earnings increased by 27 per cent to Ł80 million.
- UK general business expense ratio remains the lowest in the market, down to 10.3 per cent (1998 year-end: 12.1 per cent).
- The London & Edinburgh integration has been completed and the acquisition should be earnings enhancing by the end of 1999.
- The direct general insurance business now has 1.2 million customers and is on track to make a profitable contribution in 1999.
* Excluding the change in the equalisation provision and stated before amortisation of acquired additional value of in-force long-term business.
** Excluding the change in the equalisation provision and stated before amortisation of acquired additional value of in-force long-term business and amortisation of goodwill.
OPERATING REVIEW FOR THE SIX MONTHS TO 30 JUNE 1999
| Worldwide Group results | |||
| Operating earnings before tax * | |||
| Restated | |||
| 6 months to 30.6.99 Łm | 6 months to 30.6.98 Łm | Full year 1998 Łm | |
| UK Long-Term Savings business | 266 | 263 | 486 |
| UK General Insurance business | 80 | 63 | 145 |
| Europe & International life business | 49 | 34 | 91 |
| Europe & International general business | 10 | 14 | 16 |
| Non-insurance business | 6 | 3 | 9 |
| Holding companies | (13) | 4 | 7 |
| Corporate costs | (18) | (20) | (38) |
| Operating earnings before tax * | 380 | 361 | 716 |
* Operating earnings exclude the change in the equalisation provision and are stated before integration costs, amortisation of acquired additional value of in-force long-term business and amortisation of goodwill.
Norwich Union has continued to make very good progress during the first half of 1999. Significant investment has been made in its businesses both in the UK and internationally, and strong growth in worldwide new business has been achieved with a rise of 37 per cent to Ł265 million annual premium equivalent (30 June 1998: Ł193 million). More importantly, new business added value post cost of capital, the measure of expected profits from new business, has increased by 33 per cent to Ł60 million (restated 30 June 1998: Ł45 million). Despite the investment for future profit, Group operating earnings before tax have increased by a further 5 per cent to Ł380 million, to give a very sound overall business performance. Operating earnings per share of 14.1 pence are 6 per cent up on the restated figure for 30 June 1998 of 13.3 pence.
Our UK Long-Term Savings business, with operating earnings before tax of Ł266 million (30 June 1998: Ł263 million), contributed 70 per cent of these results. Our Europe & International insurance business achieved excellent operating earnings growth of 23 per cent to Ł59 million, and increased its contribution to the Group's earnings from 13 per cent to 16 per cent. The UK General Insurance business continued to produce good returns with operating earnings of Ł80 million, up 27 per cent (30 June 1998: Ł63 million).
During the past 12 months, the Group has used its own cash resources (over Ł600 million) to finance the acquisitions of London & Edinburgh in the UK and Portfolio Partners in Australia, to launch banking operations in the UK, to build a personal pensions business in Poland and to transform its investment management arm in the UK. As expected, in the six months to 30 June 1999, these ventures did not produce sufficient earnings to compensate for the returns lost on the cash invested in the operating businesses. However, they are progressing in line with our plans.
Worldwide general insurance gross premiums written on continuing operations increased by 63 per cent to Ł1,491 million. This result reflects growth in our existing business and the inclusion of London & Edinburgh's business. The latter was acquired in November 1998 and contributed gross premiums written of Ł420 million in the six months to 30 June 1999. The integration of London & Edinburgh is complete and we are confident that this acquisition will enhance Norwich Union's earnings for the full year 1999.
On the achieved profit basis of reporting, which combines the embedded value results of the Group's life operations with the modified statutory solvency basis results of non-life businesses, operating profit before tax rose 6 per cent to Ł334 million (restated 30 June 1998: Ł314 million). This included embedded value operating profit from life businesses of Ł269 million, 5 per cent higher than last year (restated 30 June 1998: Ł256 million).
The growth in embedded value operating profit before tax contributed to the overall increase in the embedded value of the Group's long-term business to Ł4.6 billion (31 December 1998: Ł4.4 billion). Embedded value is the main component of the shareholders' funds, which grew to Ł5.9 billion (31 December 1998: Ł5.7 billion).
On the strength of these results, the board of directors has declared an interim dividend of 4.65 pence net per share, a 9.4 per cent increase over the 1998 interim dividend of 4.25 pence.
| UK Long-Term Savings | |||
| New business figures | |||
| Restated | |||
| 6 months to 30.6.99 Łm | 6 months to 30.6.98 Łm | Full year 1998 Łm | |
| Annual premium equivalent (APE) | |||
| Life and pensions | 169 | 124 | 276 |
| Investments | 12 | 5 | 7 |
| 181 | 129 | 283 | |
| New business added value (NBAV) | |||
| Life and pensions | 50 | 37 | 82 |
| Life and pensions margin (NBAV/APE) | 29.6% | 29.8% | 29.7% |
Excellent half year figures for the UK saw long-term savings new business growth of 40 per cent to Ł181 million annual premium equivalent (30 June 1998: Ł129 million). Our UK core life and pensions sales rose by 36 per cent to Ł169 million, resulting in new business added value before cost of capital of Ł50 million (restated 30 June 1998: Ł37 million), an increase of 35 per cent. Profit margins on new business were broadly maintained, a very positive performance in our chosen markets in view of current competitive conditions.
Single premium business sales were especially pleasing, increasing by 46 per cent to Ł998 million (30 June 1998: Ł683 million). In particular, single premium bond sales of Ł393 million exceeded the total for the whole of 1998 (30 June 1998: Ł156 million, 31 December 1998: Ł392 million).
The first half of the year saw strong growth in sales of single premium personal pensions, up by 13 per cent, and single premium group pensions, which rose by 16 per cent. The future for this market is heavily influenced by plans for stakeholder pensions. The key segment in this pensions market will be corporate products, where Norwich Union is very well positioned given our established capabilities in group personal pensions.
We continue to hold a leading position in the annuity market, where our business also grew strongly to Ł333 million (30 June 1998: Ł319 million). In response to the low interest rates affecting this market, we launched a competitive with-profit annuity product in July.
Sales of maxi Isas (individual savings accounts) have started slowly across the industry, owing to last-minute investment in Peps and consumer uncertainty about the new product. However, we have a strong Isa proposition, with a wide range of actively-managed Cat standard products to help people on to the savings ladder. Our innovative and fairly-priced products have generated a positive response and we are confident that levels of business will develop further in the second half of the tax year.
| Analysis of operating earnings before tax * | |||
| Restated | |||
| 6 months to 30.6.99 Łm | 6 months to 30.6.98 Łm | Full year 1998 Łm | |
| UK Long-Term Savings | |||
| Pre-tax technical result: | 205 | 193 | 367 |
| Non-profit business ** | 52 | 62 | 102 |
| With-profit business | 257 | 255 | 469 |
| Insurance result | 9 | 8 | 17 |
| Shareholders' net investment return | 266 | 263 | 486 |
* Operating earnings exclude the amortisation of acquired additional value of in-force long-term business.
** Includes unitised with-profit and unit-linked business.
The UK market has been very buoyant, with low interest rates prompting investors to move from cash deposits into other forms of investment. Our strong sales proposition - innovative products, particularly savings vehicles, brought to market quickly through a variety of distribution channels - enabled us to benefit from these favourable conditions.
The pre-tax technical result from UK Long-Term Savings was Ł257 million (30 June 1998: Ł255 million). Non-profit business remained the most significant constituent of the result, with an increased pre-tax technical result of Ł205 million. Our excellent growth in new business has adversely affected the non-profit result through increased levels of new business strain. The growth in the non-profit technical account has also been impacted by the lower long-term rates of return earned on shareholders' capital invested in the business. The lower levels of bonus rates announced at the start of the year contributed to the reduction in the pre-tax technical result from conventional with-profit business to Ł52 million (30 June 1998: Ł62 million).
The healthcare market is extremely tough but we are operating profitably, extending our distribution channels, and delivering innovative, value-for-money products. Developments this year include the Long-Term Personal Care Bond, which can include life insurance equal to the original lump sum invested. We also launched Fair+Square, a private medical insurance product that enables people to choose between private and NHS treatment.
While we explore new distribution opportunities, and investment in our direct sales channel continues, we remain firmly committed to the independent financial adviser (IFA) channel. We have strengthened our team of IFA sales consultants, and earned a gold award in the Financial Adviser pension provider of the year awards, in which IFAs recognise excellence in investment, product design, marketing and IFA support.
Electronic commerce is a fast-growing area that will fundamentally reshape how financial services are delivered to IFAs and consumers. The maturing capabilities of the Internet and the emergence of digital television (DTV) will widen the appeal of e-commerce from a niche offering to a mass market. We are currently advancing our plans to exploit the opportunities that this will present, and are developing our Internet and DTV capabilities to support our IFA partners and the growth of our direct business.
Investment Management
Worldwide funds under management benefited from continuing stock market growth to rise to Ł60.2 billion (31 December 1998: Ł57.6 billion).
The move to London of our fund management teams is on course to be complete by September, and the recruitment of additional key people continues to strengthen the operation. We have also created a centralised dealing desk in London.
In the UK, we have won mandates for an additional Ł330 million of funds under management in the year to date, which is slightly ahead of our target. In conjunction with property and finance specialists Mill Group, we launched the Public Private Partnership Fund, the first UK institutional fund to invest in the Government's private finance initiative projects. Our new UK Ethical Fund has also attracted much favourable attention.
Our objective is to build on our achievements and deliver consistent and repeatable performance that beats the relevant industry benchmarks and firmly establishes Norwich Union as a top UK investment house.
| Europe & International | |||
| Analysis of operating earnings before tax | |||
| Restated | |||
| 6 months to 30.6.99 Łm | 6 months to 30.6.98 Łm | Full year 1998 Łm | |
| Life business pre-tax technical result: | |||
| Europe | 29 | 15 | 60 |
| International | 13 | 10 | 18 |
| 42 | 25 | 78 | |
| General business technical result | 8 | 10 | 13 |
| 50 | 35 | 91 | |
| Shareholders' net investment return | 9 | 13 | 16 |
| Insurance operations | 59 | 48 | 107 |
We continue to focus on long-term savings business in those markets where we are already strong, primarily in Europe. We will also identify and act upon specific opportunities in individual markets where we can add shareholder value. Our aim is to increase the profit contribution made by our overseas operations to Norwich Union's overall results.
Our Europe & International life and pensions sales (excluding unit trusts) rose by 16 per cent in local currency to Ł70 million annual premium equivalent, and new business added value before cost of capital grew to Ł20 million (restated 30 June 1998: Ł19 million).
Our European operations delivered growth in long-term savings new business of 11 per cent in local currency terms to Ł51 million annual premium equivalent. Particularly pleasing were the contributions from France and Ireland. Single premium new business increased by 9 per cent (in local currency) to Ł139 million, while regular premium new business grew by 12 per cent (in local currency) to Ł37 million.
Our continuing success in the Australian unit trust market and growing pensions market contributed to an increase in our International long-term savings new business of 71 per cent in local currency to Ł33 million annual premium equivalent (30 June 1998: Ł19 million). Sales through the Navigator "fund of funds" master trust rose to record levels at A$729 million, up 30 per cent, bringing total funds to A$3.9 billion.
Our European life business achieved 93 per cent growth in its pre-tax technical result of Ł29 million (restated 30 June 1998: Ł15 million), boosted by strong earnings in France and Ireland. A very encouraging performance in Australia contributed to growth in the International pre-tax technical result to Ł13 million (30 June 1998: Ł10 million). These results confirmed the excellent progress that continues to be made among our overseas businesses.
The strong new business performance in Ireland (up 33 per cent in local currency to Ł16 million annual premium equivalent) was driven by the success of with-profit bond sales, including the Celebration Bond product. The pre-tax life technical result of Ł16 million (restated 30 June 1998: Ł9 million) benefited from favourable mortality and lapse experience. A successful direct marketing campaign helped boost sales of new business in France by 8 per cent to Ł24 million annual premium equivalent, compared with 1998. The pre-tax life technical result of Ł9 million (30 June 1998: Ł5 million) reflected the containment of renewal expenses and favourable mortality experience. Against the background of a difficult market for new business, we achieved a steady performance in Spain, with a pre-tax life technical result of Ł3 million (30 June 1998: Ł2 million).
In July, we acquired British Life in Spain, which had total premium income of Ł27 million in 1998. British Life has a strong direct sales force which will complement the primarily broker-based distribution of our Spanish subsidiary, Plus Ultra. This will significantly increase our ability to sell long-term savings and protection products throughout Spain, while providing an opportunity to improve efficiency.
The pensions and fund management industries in Australia have witnessed dramatic expansion in recent years, and we expect this growth to continue. The pre-tax technical result of our long-term business operations rose to Ł12 million (30 June 1998: Ł10 million). New life and pensions business in Australia (excluding unit trusts) rose by 32 per cent in local currency to Ł16 million annual premium equivalent, including strong sales of single premium savings bonds and pension products.
Bolstered by last year's acquisition of leading fund management company Portfolio Partners, our unit trust sales increased by in excess of 200 per cent and wholesale fund mandate sales were up 74 per cent to A$462 million. Our Australian fund management operations, whose results are excluded from the analysis of Europe & International operating earnings, contributed Ł7 million to the Group's results in the first half of 1999 (30 June 1998: Ł2 million).
In July, we acquired 50.1 per cent of the share capital of First Australian Property Group Holdings Pty Ltd (known as "Paladin"). The remaining share capital will be bought in 2004. Paladin is one of the top 10 property fund managers in Australia, with funds under management of more than A$1.8 billion (about Ł0.8 billion). The addition of Paladin's property investment management skills and reputation will further support our strategy of securing a leading position in the Australian long-term savings and pensions market.
We launched a new personal pensions business in Poland in March, where Norwich Union is one of only 20 companies, just two of them British, conducting business in the newly-privatised pensions market. Excellent progress to date is reflected in nearly 200,000 proposals received by 30 June 1999, giving us an estimated 5 per cent share of the Polish pensions market. We expect to include figures from Poland in our full year results for 1999. This new operation demonstrates our ability to transfer knowledge across the Group and apply our expertise in new markets. We are looking to build on the impressive brand recognition already achieved and develop into other long-term savings areas.
Our Europe & International general insurance operations, of which New Zealand is the largest, produced an overall pre-tax technical result of Ł8 million (30 June 1998: Ł10 million). In Spain, a feature of the general insurance market has been an increase in claims costs for motor insurers. This had an adverse impact on our Spanish general business results, with a pre-tax technical loss of Ł3 million (30 June 1998: Ł1 million profit).
| UK General Insurance | |||
| Analysis of operating earnings before tax * | |||
| Restated | |||
| 6 months to 30.6.99 Łm | 6 months to 30.6.98 Łm | Full year 1998 Łm | |
| Technical Results - Motor | 12 | 20 | 34 |
| - Household | 13 | (1) | 2 |
| - Property and packages | 13 | 10 | 30 |
| - Creditor | 9 | 3 | 5 |
| - Other (including discontinued operations) | 4 | 2 | 7 |
| Shareholders' net investment return | 29 | 29 | 67 |
| Operating earnings before tax * | 80 | 63 | 145 |
* Operating earnings exclude the change in the equalisation provision and amortisation of goodwill.
Our UK General Insurance business continues to prosper having successfully integrated London & Edinburgh. With improved critical mass in our personal lines business we are continuing to build our profitable track record. Our investment in leading-edge systems, outstanding claims management and a broad distribution approach continues to see us through challenging market conditions.
Our UK General Insurance business produced operating earnings before tax of Ł80 million (30 June 1998: Ł63 million), a rise of 27 per cent. The technical result, excluding the change in the claims equalisation provision, rose to Ł51 million, boosted by the relative absence of bad weather claims which in 1998 depressed the comparative technical result by Ł13 million.
Gross premiums written on continuing operations rose to Ł1,288 million (30 June 1998: Ł718 million). A ratio of expenses to premiums of 10.3 per cent (31 December 1998: 12.1 per cent) reflects the success of our commitment to excellent operational efficiency and benefits arising from the improved business mix achieved following the acquisition of London & Edinburgh.
The successful integration of London & Edinburgh was achieved by 1 June. The benefits that we set out at the time of the acquisition last November are well on track, with annual expense savings of Ł30 million due to be realised from 2000. The cost of integration will be in line with the Ł35 million previously announced. The two operations have come together smoothly, with minimum disruption to our customers. All the necessary processes are in place for new business and renewal conversion, and we have successfully retained most of the business previously written by London & Edinburgh.
The motor account represents the largest segment of our business. It was therefore pleasing to see a growth in net premiums written from Ł380 million to Ł544 million. The market is seeing the rate increases that we predicted. Private car rates are 14 per cent higher than 12 months ago, and fleet rates have increased by double that average figure over the same period. The effect of these increases on profitability are largely overshadowed by increased claims costs arising from personal injury cases and the Government's decision to move the cost of treating road accident victims from the NHS to insurers. These changes mean that further increases will be necessary, and we are pricing accordingly. The combination of these factors, together with the impact of including the loss-making London & Edinburgh book, has contributed to a reduction in the motor account technical result to Ł12 million (30 June 1998: Ł20 million). We are taking action to address the changes imposed on the market and to return the London & Edinburgh portfolio to profit. The effects of our action will flow through in the second half of the year.
In the household market we believe prices must also increase. The technical result was up at Ł13 million (30 June 1998: loss of Ł1 million), benefiting from lower weather-related claims and a positive contribution from London & Edinburgh, whose business gives our portfolio more balance. London & Edinburgh has also increased our market share and positioning with intermediaries in the property and packages business. As we reported at the end of last year, margins are being squeezed but still represent a good return on premium. The technical result for this account was Ł13 million (30 June 1998: Ł10 million). Our creditor business produced a technical result of Ł9 million (30 June 1998: Ł3 million). This growth area of the business has been substantially strengthened by our acquisition of London & Edinburgh.
Norwich Union Direct, having ended 1998 with more than one million retained policies, is on track to make a profitable contribution in 1999. Standards of excellence in its call centres have been recognised by two further industry awards this year.
Hill House Hammond, the high street insurance intermediary owned by Norwich Union, continued to perform strongly. While not included in the analysis of UK General Insurance operating earnings since it is classified as a non-insurance operation, Hill House Hammond increased profits to Ł8 million (30 June 1998: Ł5 million).
The development of market-leading distribution channels continues to help Norwich Union's general insurance business achieve profitable growth. Forward-thinking, flexible partnerships with leading brand names such as Ford, Barclays, NatWest, Nationwide and Saga, and a growing direct and high street business with more than two million customers, are underpinned by the strong relationships we enjoy with national brokers and full-time insurance intermediaries.
As a leading investor in electronic trading in the insurance sector, we continue to create benefits from new technology. Our general insurance web site for intermediaries went live in February, giving registered intermediaries access to details of products, services and marketing advice. The Internet is not a major part of our insurance business at the moment but we have committed ourselves to developing a significant business in this growing market.
Millennium
We have devoted considerable time and effort to ensure that our business will not be affected by the millennium date change at the end of 1999. We are confident that all systems critical to running Norwich Union's operations have been year 2000 compliant since the end of 1998. Testing of our year 2000 contingency measures will be completed by the end of September 1999. A small number of systems which will be obsolete and removed before 2000 have not been made compliant, and we will continue to monitor the business partners upon whom we rely until they complete their programmes. Our estimate of the overall cost associated with this exercise has increased to Ł37 million (previously Ł35 million) as a result of acquiring London & Edinburgh. Some Ł10 million has been included in the interim results, bringing the total spend at 30 June 1999 to Ł31 million.
We are maintaining our position that, as an insurer, Norwich Union cannot provide universal cover against loss or damage caused by the date change. It is a foreseeable risk, and the provision of such cover would discriminate against customers who have spent much time and money solving the problem for themselves. In line with the rest of the industry, we have excluded liability for claims arising from specific date-related problems, and have made this known to our policyholders and intermediaries.
Directors
Two changes to the main board were announced during the first half of this year.
Albert Mills, Chief Executive, UK General Insurance, is to retire on 30 September 1999. Albert joined Norwich Union in 1962 and is the longest-serving executive director on the board, having been appointed in January 1990. Our general insurance business has changed and prospered greatly during his time as a director, and we wish him well in his retirement. Albert will be succeeded by Patrick Snowball, currently Managing Director, UK General Insurance (Intermediaries). Patrick, who will become a member of the board on 1 October 1999, has worked within the Norwich Union Group since 1989, and was appointed to his present post in 1996. He is currently responsible for the very successful UK general insurance intermediaries operation, including the award-winning Clubline claims process.
The second change involved the appointment of Guillermo de la Dehesa as a non-executive director on 28 May 1999. Guillermo has been non-executive chairman of the board of Norwich Union's Spanish subsidiary, Plus Ultra, since 1996. He has considerable experience in both the public and private sectors in Spain, and has extensive international knowledge, including vice-chairmanships of Goldman Sachs Europe and the Centre for Economic Policy and Research in London.
Outlook
Norwich Union's prospects for the remainder of 1999 and beyond are good. We are operating in a general climate of welfare reform and legislative change designed to place more responsibility on the individual for private financial provision. We have strong, well-established operations in the UK, supported by developing businesses in attractive markets in Europe and beyond, positioned to meet these individual needs.
Our clear focus on shareholder value means that we concentrate on writing business that will generate high-quality earnings into the future. We are in good shape to take advantage of opportunities to develop and expand in the three areas we have identified as our strategic priorities:
- growth of UK long-term savings business;
- building strong businesses in attractive long-term savings markets overseas;
- profitable development of UK general insurance business.
There are short-term challenges to be overcome in a fiercely competitive business. In common with the rest of the industry, we must hold down our costs and produce good returns in an environment of low inflation and low interest rates. But we are clearly focused on what needs to be achieved and are firmly committed to our three strategic priorities. We continue to make encouraging progress in all three areas as we work towards our primary objective of building shareholder value.
Richard Harvey, Group Chief Executive
George Paul, Chairman
Dividends: Shareholders entitled to receive a dividend converted to Irish punts will receive 5.49 Irish pence per share based on the exchange rate prevailing on 2 August 1999. The payment date of the dividend will be 15 December 1999 and the record date will be 15 October 1999.
Note to Staff
The full Interim Report, containing the accounts and other financial details, is available on the intranet.