Richard Harvey, Norwich Union's group chief executive, commented: "Norwich Union made excellent progress during 1999 due to a clear focus on our strategic priorities.
| 1999 Łm | 1998 Łm | change | ||
| Long-term savings new business APE* | 630 | 421 | +50% | |
| Value added by new business before cost of capital | 172 | 116† | +48% | |
| Achieved operating profit before tax** | 717 | 670† | +7% | |
| Statutory operating earnings before tax*** | 761 | 716 | +6% | |
| Profit before tax | 768 | 774† | -1% | |
| Statutory operating earnings per share*** | 28.0p | 25.4p | +10% | |
| Dividend per share | 14.0p | 12.8p | +9% | |
| Shareholders' funds | 6,039 | 5,713 | +6% |
- Outstanding growth in UK long-term savings
- Strengthened recognition as a leading investment brand
- Successful market entry in Poland
- Record year for Navigator
- UK General Insurance boosted by London & Edinburgh acquisition
- Investment in Norwich Union Direct reaps rewards
- Funds under management increased by 13 per cent to over Ł65 billion
Richard Harvey, Norwich Union's group chief executive, commented:
"Norwich Union made excellent progress during 1999 due to a clear focus on our strategic priorities.
"Outstanding new business growth was achieved in UK long-term savings. Importantly, profit margins on life and pensions business were maintained. Sales through IFAs produced 88 per cent of UK long-term savings new business and we successfully grew our sales from other distribution channels. Much of the growth was from single premium business - product innovation and development played a key role as we launched or redesigned some 15 new products. Our strong investment profile has also enabled us to become one of the leading providers of actively managed Cat-standard Isas.
"The launch of Norwich Union Investment Funds in May 1999 and the expansion of our investment management team signalled our determination to grow our reputation in this area.
"Our international operations now account for 17 per cent of total operating earnings before tax. We achieved impressive growth in new business sales, up by 58 per cent in local currency. Sales in Poland are included, where we achieved 6 per cent market share in the newly-privatised pensions market. We had an excellent year in Australia, bolstered by the performance of the two leading fund management companies we acquired and the continued success of Navigator. We also have high expectations for our Dublin-based life and investment operation, Norwich Union International Limited. This operation will offer a range of single premium investment products distributed through a wide range of channels and supported by the internet, to clients in Italy and the UK as well as expatriates in Spain.
"Despite the challenging market conditions, UK General Insurance continued to produce strong returns, and benefited from the integration of London & Edinburgh, which enhanced our earnings. Our expense ratio remains the lowest among our major competitors, as we continue to drive down costs. Norwich Union Direct now has 1.4 million customers and made a profitable contribution in 1999.
"Overall, Norwich Union is in great shape and our investment in future growth is paying dividends, as we continue to focus on our primary objective of growing shareholder value."
* Annual premium equivalent - new regular premiums plus 10 per cent of single premiums.
** Excludes the change in the equalisation provision and stated before integration costs and amortisation of goodwill.
*** Excludes the change in the equalisation provision and stated before integration costs, amortisation of acquired additional value of in-force long-term business and amortisation of goodwill.
† Restated figure.
Ends
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Highlights
Business growth
- Worldwide new business sales of long-term savings products (life, pensions and investments) increased by 50 per cent to Ł630 million annual premium equivalent.
- Worldwide life and pensions new business added value before cost of capital increased by 48 per cent to Ł172 million.
- UK life and pensions sales rose by 39 per cent to Ł385 million annual premium equivalent.
- UK life and pensions new business added value before cost of capital was up 41 per cent to Ł110 million.
- Sales of UK investment products (Isas and Oeics) increased to Ł27 million annual premium equivalent (1998: Ł7 million).
- International new business sales of long-term savings products increased by 58 per cent (in local currency) to Ł218 million annual premium equivalent.
Group
- Gross premiums written increased by 38 per cent to Ł7.8 billion.
- Worldwide pre-tax technical result(1) of our insurance operations was up 13 per cent to Ł722 million.
- Statutory operating earnings(2) growth of 6 per cent to Ł761 million was suppressed by investment in strategic initiatives, lower longer-term investment returns and new business strain.
- Funds under management increased by 13 per cent to over Ł65 billion.
- Worldwide life embedded value operating profit before tax increased by 11 per cent to Ł599 million before charging Ł14 million of development costs in relation to setting up our Polish pensions business. Life businesses contributed 82 per cent of achieved operating profit(3) of Ł717 million.
UK Long-Term Savings
- The UK non-profit business pre-tax technical result(4) grew to Ł414 million contributing 57 per cent of the group pre-tax technical(1) result.
- The embedded value of our UK long-term business increased to Ł3.8 billion representing 63 per cent of shareholders' funds.
International operations
- The International pre-tax life technical result increased by 36 per cent to Ł106 million before Ł14 million of development costs in relation to setting up our Polish pensions business.
- A record year for Navigator in Australia with sales increasing by 37 per cent to A$1.6 billion and total funds under administration of A$4.8 billion. We estimate that Navigator and our other non-life businesses in Australia generated new business added value of A$42 million and have an embedded value of A$140 million after dividend payments of A$37 million.
- We successfully entered the pensions market in Poland with 500,000 pension policy applications by the end of December, an estimated market share of 6 per cent. Poland added new business sales of Ł37 million annual premium equivalent and Ł17 million of new business added value.
UK General Insurance
- Market leading results with an overall combined ratio of 103.4 per cent and an expense ratio excluding commissions of 10.1 per cent (1998: 12.1 per cent).
- Boosted by the inclusion of London & Edinburgh, the pre-tax technical result(5) increased by 35 per cent to Ł105 million.
- The acquisition of London & Edinburgh enhanced earnings in 1999.
- Norwich Union Direct now has 1.4 million customers and, as planned, was profitable in 1999.
(1) Excludes the change in the equalisation provision and stated before amortisation of acquired additional value of in-force long-term business.
(2) Excludes the change in the equalisation provision and stated before integration costs, amortisation of acquired additional value of in-force long-term business and amortisation of goodwill.
(3) Excludes the change in the equalisation provision and stated before integration costs and amortisation of goodwill.
(4) Stated before amortisation of acquired additional value of in-force long-term business.
(5) Excludes the change in the equalisation provision.
Ends