Unaudited Results - 3 months ended 31 March 2000
Bob Scott, Group Chief Executive, commented:
"The Group made a strong start to the year with the pre-tax operating profit increasing by Ł141m to Ł396m, including life achieved operating profits, and operating earnings per share were up 59%. Our life, asset management and general insurance businesses all achieved better results, helped by the inclusion of acquisitions.
The strong development of our life and savings business continued with sales reaching Ł1.9bn, including a 19% increase in life and pensions new business. The pre-tax value of new business increased by 40% to Ł66m. Good growth continued in the UK with life and pension sales up 24% with similar product margins. In France, one of our largest life businesses, new business grew by 64% and in Poland we continued to benefit from our success in the new pensions market. Achieved life operating profits were up 68% to Ł289m, benefiting from changes in economic assumptions, growth in new business contribution and an increased roll up from a higher embedded value than at the start of last year. On a modified statutory basis, life profits increased to Ł127m from Ł116m last year, which now includes the results of Your Move, the UK estate agency chain.
We have significantly increased the distribution power of our UK life and savings businesses through deals with The Royal Bank of Scotland and Tesco. The Royal Bank of Scotland, when combined with NatWest, provides opportunities to sell through a network of some 2,000 branches and to 9 million current account customers. We also became the exclusive provider of life and pension products to Tesco Personal Finance, with its 1.4m customers. Discussions are continuing with Société Générale with a view to strengthening our position in the French long term savings market - we are also seeking other bancassurance distribution arrangements in Europe.
General insurance profits rose 46% to Ł165m, with improved underwriting results in the United Kingdom and United States, although increased estimates of claims from the December storms and large losses impacted results in Continental Europe. The longer term investment return was Ł62m higher at Ł362m, reflecting higher investment returns and acquisitions. General insurance premiums were up 7% to Ł2,404m, with rate increases being significant. Rating and underwriting actions continued to be taken in all our principal businesses with rates continuing to firm in most markets, including the United Kingdom. Our cost savings programme has produced one of the lowest administration expense ratios of the major players in the United Kingdom, with a reduction to 11% from 13% in the first quarter.
The group has a number of e-commerce and new technology initiatives underway. In March, we started selling life policies on the internet in the United Kingdom, and motor policies in France through Eurofil, the 2nd largest tele-direct writer. In a separate announcement today, we advised of the launch of "asserta home", a major e-commerce initiative for home buyers. This is the first strand of our wealth management project using internet technology, further announcements on which will be made at the time of the interim results.
We announced in February of this year the planned disposal of our US general insurance business, in preference to investing the substantial sums required to reach a leading market position. An information memorandum has been circulated to interested parties.
Our planned merger with Norwich Union to create CGNU, the United Kingdom's largest insurer, is on schedule for completion around the end of May. The merger received strong support from shareholders and good progress is being made on regulatory approvals around the world, including approval from the European Commission. Both companies have the management expertise and experience to successfully integrate these large businesses."
A strong start to the year
- The Group made a strong start to the year with the pre-tax operating profit significantly higher at Ł396m (1999 Ł255m), including life achieved operating profits. On a modified statutory basis, pre-tax operating profits also increased to Ł234m (1999 Ł190m).
- Life achieved operating profits increased to Ł289m (1999 Ł181m). Total life new business of Ł1.9bn included life and pensions sales up 19%. New business value up 40%.
- General insurance profits up 46% to Ł165m, with rates firming in most businesses.
- CGNU merger on schedule to be completed around the end of May 2000, making the combined Group one of the leading European insurers.
| Enquiries: | |
| Bob Scott, Group Chief Executive | Telephone: 020 7662 2003 |
| Peter Foster, Group Finance Director | Telephone: 020 7662 2007 |