Bob Scott, Group Chief Executive, commented: "Our strong portfolio of UK and Continental European businesses made good progress in the first quarter, with total sales of £1.9bn and life and pensions sales up 19%. UK life and pensions sales were up 24%, benefiting from our strong with-profits performance and good growth in pensions business. We have also significantly expanded our distribution power through new distribution agreements with RBS NatWest, and more recently with Tesco.
- Total worldwide new business sales of Ł1.9bn with life and pensions sales up 19% at Ł1,712m (APE* up 43%).
- New annual premiums up 79% to Ł190m, including Ł77m from Polish pensions.
- Single premium sales 14% higher at Ł1,522m.
- ISA, unit trust and UCITS sales were lower at Ł172m, following the
*APE (annual premium equivalent) is total new annual premiums plus 10% of new single premiums and investment products.
Bob Scott, Group Chief Executive, commented:
"Our strong portfolio of UK and Continental European businesses made good progress in the first quarter, with total sales of Ł1.9bn and life and pensions sales up 19%. UK life and pensions sales were up 24%, benefiting from our strong with-profits performance and good growth in pensions business. We have also significantly expanded our distribution power through new distribution agreements with RBS NatWest, and more recently with Tesco. France produced an excellent performance with sales up 64% and we continued to benefit from our success in Polish pensions, having captured around 30% of pension funds under management in the privatised market.
Our merger with Norwich Union received strong support from shareholders and is expected to be completed by early June 2000, creating the UK's second largest life business and the fifth largest in Europe."
| Enquiries: | |
| Media: Robbie Graham, Director of Life Development | +44(0)20 7662 2050 |
| Analysts/Investors: Steve Riley, Head of Investor Relations | +44(0)20 7662 8115 |
| UK Trade Press: | 01904 452 172 07968 934035 (mobile) |
| New single premiums | New annual premiums | Investment Sales (ii) | TOTAL | ||||
| 3 mths 2000 Łm | Local currency growth % | 3 mths 2000 Łm | Local currency growth % | 3 mths 2000 Łm | Local currency growth % | Local currency growth % | |
| | |||||||
| United Kingdom | 749 | 24 | 46 | 28 | 104 | (60) | - |
| France | 466 | 64 | 4 | 29 | 64 | ||
| Netherlands | 109 | 32 | 15 | (13) | 25 | ||
| Italy | 59 | (77) | 1 | (90) | (77) | ||
| Poland - life | 3 | 24 | 12 | (24) | (17) | ||
| Poland - pensions | - | n/a | 77 | n/a | n/a | ||
| Germany | 14 | (69) | 12 | 95 | (49) | ||
| Other | 72 | 180 | 10 | 264 | 68 | 138 | 163 |
| Europe | |||||||
| Rt of World | 50 | 20 | 13 | 16 | 19 | ||
| | |||||||
| TOTAL | 1,522 | 14 | 190 | 79 | 172 | (40) | 9 |
| | |||||||
Notes:
(i) Average exchange rates used.
(ii) Includes ISAs, unit trusts and UCITS (collective investments sold throughout Europe and Asia).
UK : CGU Life is a top 3 life insurer for total new business, with a market share of around 5%. In addition to our multi-distribution capability through IFAs, building societies, estate agents and direct, we have significantly expanded our distribution power through new deals with RBS NatWest and Tesco. The Royal Bank of Scotland and National Westminister Bank provide a network of some 2,000 branches. CGU will manufacture the products and invest the funds under management in the joint venture. As part of the deal, CGU plans to acquire 50% stakes in the Royal Bank of Scotland's life insurance subsidiary, Royal Scottish Assurance and also in NatWest Life. Discussions are expected to reach a conclusion in the coming months following due diligence. In addition, we are now the exclusive supplier of life and pension products to Tesco Personal Finance, which has over 1.4m customers. ISA and life protection products will be sold initially, building a wider range of pension and investment products during the year.
CGU Life's new life and pensions sales were 24% higher at Ł795m. This reflected strong Portfolio bond and pension sales, benefiting from the strength of our with-profits performance. Investment sales were lower following buoyant PEP sales in the first quarter of 1999.
New annual premiums increased by 28% to Ł46m, reflecting good pension and protection sales. Our strong pension performance, with individual pension sales up 39% to Ł19m and group pension business 23% higher at Ł12m, lays the foundation for a successful entry into the stakeholder market. The recent government decision to allow with-profits funds for stakeholder pensions will benefit the group. Life protection sales increased to Ł9m (1999 Ł4m) and we began selling term assurance over the Internet in March. Mortgage endowments sales of Ł6m (1999 Ł8m) were lower reflecting the trend of recent quarters.
New single life premiums increased by 24% to Ł749m, boosted by excellent sales of our flagship investment product, the Portfolio Bond, which were up 36% to Ł534m despite increased competition in this market. Single premium pensions were in line with last year at Ł192m (1999 Ł196m). This included a 31% increase to Ł127m in individual pension business, offset by lower group pension sales.
CGU Life was a major beneficiary of the increase in Personal Equity Plan activity last year ahead of the transition into Individual Savings Accounts ("ISAs") in April 1999. In the first quarter of 2000 new ISA and unit trust sales were 60% lower at Ł104m, reflecting both the strong first quarter last year and a move into technology investments, away from income producing products.
France : CGU France produced an excellent first quarter performance, well ahead of the market. New single premiums, which dominate the market, increased by 64% against market growth of some 50%. AFER bond sales of Ł207m were 39% higher, benefiting from its position as the largest savings organisation in France with over 500,000 members and the strong investment yield of 6.23% in 1999.
Sales of SFER, the unit-linked product of AFER, also increased strongly and represented 30% of total AFER sales in the first quarter. Unit-linked sales (including Ł89m in unit-linked AFER sales) and other savings products more than doubled to Ł223m, reflecting increasing consumer interest in equity-linked products following the strong performance of the French stock market during 1999 and the prevailing low interest rate environment. Group protection sales were in line with last year at Ł36m due to our focus on selective underwriting.
Netherlands : Delta Lloyd Nuts Ohra is the third largest life and pensions insurer in the Netherlands, with a market share of around 6%. Single premium sales were up 32% at Ł109m, boosted by the inclusion of Ł20m from the acquisition of Nuts Ohra and increased individual pensions sales. For annual premiums, sales of our universal life product, Delta Life, increased by 27% to Ł3m, and group pensions of Ł5m were 13% higher. We reduced sales of less profitable protection products and overall, new annual premiums of Ł15m were 13% lower.
Italy : Bancassurance now accounts for around 60% of life sales in the Italian market and we are seeking to build on our bancassurance distribution. Our partnership with Banca delle Marche, which sells through a 250 branch network, is developing well, with Ł71m in single premium sales since its launch in September 1999, including Ł16m in the first quarter (1999 nil). Sales from Banca Popolare di Lodi were at a similar level to last year, adding Ł3m in single premiums and Ł1m in new annual premiums.
Overall, single and annual premiums were lower at Ł59m and Ł1m respectively, following the ending of our bancassurance agreement with Credito Italiano last year.
Poland : In Poland, we are the market leader for private pensions having captured over 20% of the market by number of customers and around 30% by funds under management. We now have a customer base in excess of 3 million, providing future cross-selling opportunities. Over 60% of our new pension customers are aged 30 or under. With a normal retirement age of 65 across the population, pension savings will generate substantial long term investment, producing rapid growth in funds under management. We established a fund management business last year to manage these funds and to compete for third party mandates.
Delays in redirecting pension payments from the state system meant that our pensions success in 1999 continued to benefit new business in the first quarter of 2000. New annual pension premiums of Ł77m were received. Along with the Ł282m of annual pension premiums received in 1999, this represents the processing of 2 million cases, with a further 300,000 cases in the pipeline.
We are starting to win new pension customers as they enter the market. In the first quarter, we attracted a further 26,000 new pension cases, with the premiums to be processed in the second quarter.
CU Polska increased its share of the life market to 20% in 1999, up from 18%. First quarter 2000 life sales were lower, however, following the market's focus on pension business last year. There has been some movement towards single premium business as personal assets grow and single premium life sales were 24% higher at Ł3m with annual premiums 24% lower at Ł12m. Long term growth prospects remain very good, with only around 2 million out of a possible 15 million employed people having an individual life policy.
Germany : Berlinische Leben achieved a 95% increase in new annual premiums to Ł12m, reflecting our increased focus on annual premium business. Single premiums were ahead of the fourth quarter of 1999 at Ł14m, but were lower than the exceptional sales of Ł51m in the first quarter of 1999.
Ireland : The completion of the Hibernian acquisition was effective from 1 January 2000. Single premium investment bond sales doubled to Ł50m (1999 Ł25m), including Ł26m from Hibernian. This partly reflected the successful launch of a new bond product and the buoyant Irish economy. New annual premiums were Ł7m (1999 nil), including Ł6m from Hibernian, reflecting good pensions sales.
Turkey presents a new pensions opportunity, with a Bill supporting private pensions currently before parliament. Our Turkish business is gearing up for this opportunity and we hope to be one of the first companies to be granted a pensions licence later this year. Our life business, CU Hayat Sigorta, ranks fourth largest in the market for new business and continues to develop strongly. Annual premium sales doubled to Ł6m with strong growth in sales of unit-linked products from a growing salesforce of 660, a 50% increase over the same period last year. Our cross-border life business in Luxembourg achieved Ł5m in single premiums and sales of UCITS (collective investment schemes) increased by 138% to Ł68m, reflecting growth through institutional clients.
In the United States, single premium sales were 23% higher at Ł40m, with strong sales of deferred annuity products and improved demand for immediate annuities. Following withdrawal from unprofitable group health business in 1999, annual premiums were 24% lower at Ł5m. In Canada, single premiums of Ł10m were up 10%, reflecting good sales of our segregated funds products, and new annual premiums were in line with last year at Ł2m.
Asset Management
CGU is one of the top 20 fund managers in Europe, managing worldwide assets of around Ł135bn.
Morley Fund Management in the UK and Victoire Asset Management in France both won industry awards in 1999, enhancing the group's fund management reputation. Delta Lloyd Nuts Ohra is one of the largest asset managers in the Netherlands. Ohra, part of the Nuts Ohra acquisition, has outperformed all other domestic asset managers over the last five years and is selling increasing business via the Internet. In the UK, strong long term investment performance continues with our third party pension fund ranking in the top quartile over the last 5 years.
Notes to Editors
On 21 February 2000, CGU and Norwich Union announced a proposed merger of the two groups. This was approved by both CGU and Norwich Union shareholders at Extraordinary General Meetings on 31 March 2000 and the proposed merger is expected to be completed by early June 2000.
CGNU will be the largest insurance group in the UK with worldwide premium income and retail investment sales of Ł26bn and will be a top 5 European life insurer based on premium income.
The geographical split of CGU's total life, pensions and retail investment sales for the 12 months to 31 March 2000 was:
| % | |
| United Kingdom | 49 |
| France | 21 |
| Netherlands | 6 |
| Italy | 8 |
| Poland | 6 |
| Other Europe | 6 |
| Rest of World | 4 |
| 100 |
| Distribution of CGU's UK life and savings products using APE (annual premium equivalent is total new annual premiums plus 10% of new single premiums and investment products) for the first quarter of 2000 was: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All growth rates are quoted in local currency. CGU's 3 months 2000 results will be reported on 10 May 2000.
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