CGNU agrees sale of South African General Insurance business

Following the earlier announcement of negotiations, CGNU has agreed terms for the sale of its 51% stake in its South African general insurance business to Mutual & Federal Insurance Company Limited.

The business had net premium income of Ł137m in 1999 and net assets of Ł100m at 31 December 1999.

CGNU's South African subsidiary is a listed company in South Africa and in the announcement to the Johannesburg Stock Exchange that follows, is referred to as "CGU".

Enquiries:

Steve Riley Investor Relations Director
+ 44 (0)20 7662 8115

NOTES TO EDITORS

• CGNU was formed by the merger of CGU and Norwich Union, which completed on 30 May 2000.
• CGNU is the largest UK based insurance group and a top five European life insurer with worldwide premium income and retail investment sales of Ł26bn. It is the second largest UK based fund manager with over Ł200bn of assets under management.

ANNOUNCEMENT TO THE JOHANNESBURG STOCK EXCHANGE

JOINT ANNOUNCEMENT OF PROPOSED ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF CGUH BY MUTUAL & FEDERAL AND FURTHER CAUTIONARY ANNOUNCEMENT

1. Introduction

   Further to the cautionary announcement dated 15 June 2000, shareholders are advised that Mutual & Federal has entered into agreements with CGU International Holdings B.V. and Metropolitan (together, "the Vendors"), which collectively own 79% of the issued share capital of CGUH. In terms of these agreements, the Vendors have irrevocably undertaken to either vote in favour of a scheme of arrangement to be proposed, or accept an offer to be made, by Mutual & Federal (collectively, "the offer").

   It is the firm intention of Mutual & Federal to make the offer on the terms and conditions set out below.

   Nedcor Investment Bank Limited has confirmed to the Securities Regulation Panel ("SRP") that Mutual & Federal has the necessary cash resources to implement the offer.

2. Terms of the offer

   The offer consideration payable in cash by Mutual & Federal for the entire issued share capital of CGUH pursuant to the offer shall be the sum of the following:

   - The audited consolidated net tangible asset value    of CGUH as at 31 May 2000 ("NTAV"); and

   - R190 000 000.

   The offer consideration will be determined once the NTAV has been finalised. As soon as this has been completed, a further announcement, giving full details of the offer and the financial effects on CGUH, Mutual & Federal and Metropolitan shareholders, will be made.

3. Conditions precedent

   The making of the offer is subject to the fulfilment, inter alia, of the following conditions:

4. • the satisfactory outcome of a due diligence review of CGUH by Mutual & Federal;
   • the approvals of the Registrar of Short-term insurance and the approval of such other regulatory authorities as may be legally required;
   • the approval of the relevant documentation by the Johannesburg Stock Exchange and the SRP;
   • the approval in general meeting by the shareholders of Mutual & Federal of the acquisition; and
   • if applicable, the approval of the scheme of arrangement by CGUH shareholders and the sanctioning thereof by the High Court.
     
5. Opinions and recommendations

   The CGUH Board of Directors ("The Board") has appointed Brait Merchant Bank Limited ("Brait") to advise them regarding the terms of the offer. The opinion of Brait and the Board will be announced to CGUH shareholders upon the offer being made.

6. Further cautionary announcement

   Further announcements will be made once the NTAV has been finalised and the due diligence of CGUH has been completed. Accordingly shareholders of Mutual & Federal, CGUH and Metropolitan are advised to continue to exercise caution until a further announcement is made.