"These are excellent figures from our United Kingdom and overseas businesses with healthy increases in new business since the announcement of the merger between CGU and Norwich Union in February. Our distribution power will increase through bancassurance alliances in both the United Kingdom and Spain and we believe that the financial strength of the group combined with our excellent long-term investment performance will increasingly make our products attractive to investors and financial advisors."
- Worldwide new business sales increased by 18% to Ł6.1 billion (APE* up 25% to Ł1 billion)
- New regular premium sales up 37% to Ł0.5 billion
- Total single premium sales 17% higher at Ł5.6 billion
- Total UK new business sales increased by 24% to Ł3.7 billion
- Worldwide retail investment sales up 21% to Ł0.8 billion
*APE (annual premium equivalent) is total new annual premiums plus 10% of new single premiums.
Bob Scott, Group Chief Executive, commented:
"These are excellent figures from our United Kingdom and overseas businesses with healthy increases in new business since the announcement of the merger between CGU and Norwich Union in February. Our distribution power will increase through bancassurance alliances in both the United Kingdom and Spain and we believe that the financial strength of the group combined with our excellent long-term investment performance will increasingly make our products attractive to investors and financial advisors."
Enquiries:
Media: | Charles Watson, Financial Dynamics | +44(0)20 7831 3113 |
Analysts/ Investors: | Philip Scott, Group Executive Director UK Life | +44(0)19 0445 2827 |
Tom Fraser, Managing Director, Europe | +44(0)20 7662 2100 | |
Steve Riley, Investor Relations Director | +44(0)20 7662 8115 |
Single | Regular | Total | |||
6 months to 30 June 2000 | Local currency growth | 6 months to 30 June 2000 | Local currency growth | Local currency growth | |
Łm | Łm | ||||
Life and pensions | |||||
United Kingdom | 2,966 | 27% | 182 | 21% | 27% |
France | 968 | 49% | 21 | (5%) | 47% |
Ireland | 198 | 74% | 25 | 170% | 81% |
Netherlands | 203 | 33% | 32 | (8%) | 25% |
Poland | 5 | (8%) | 131 | 312% | 266% |
Spain | 37 | 197% | 5 | (29%) | 116% |
Other Europe | 183 | (71%) | 42 | (28%) | (67%) |
International | 228 | 2% | 23 | 5% | 2% |
Total life and pensions | 4,788 | 16% | 461 | 37% | 18% |
Investment sales | |||||
United Kingdom | 510 | 10% | 11 | 38% | 10% |
Other Europe | 121 | 114% | - | - | 114% |
International | 166 | 18% | - | - | 18% |
Total investment sales | 797 | 21% | 11 | 38% | 21% |
Total long-term savings | 5,585 | 17% | 472 | 37% | 18% |
United Kingdom: The new business figures reflect a continued strong performance since the merger was announced in February 2000. We believe the financial strength of the combined Group has proved to be attractive to investors and that on-going support from financial advisors has helped to push up sales in the run up to the summer months.
Total United Kingdom new business sales increased by 24% to Ł3.7 billion in the first half of 2000 and in APE terms were 23% higher at Ł541 million. The long-term savings businesses of Norwich Union and CGU now command an estimated UK market share of 10% giving a leading position in the life and pensions market place. CGNU is the leading provider to the IFA market and IFA business has grown strongly in the first half of the year, increasing by 31% over the first six months of 1999 and also showing an 8% quarter on quarter improvement in 2000. IFAs provide over 75% of CGNU’s long-term business in the United Kingdom.
New regular premiums increased by 21% to Ł193 million. The combined businesses have a market leading position in term assurance sales based on first quarter figures, supported by very strong growth in the second quarter.
Bond and savings sales showed an impressive increase of 24% in new business single premiums to Ł1.7 billion. The significant success of bond sales is attributed to the continued support by IFAs underpinned by the attractive product range in the current economic climate.
Total individual pension sales increased by 31% to Ł559 million and group pensions increased 59% to Ł357 million reflecting CGNU’s broad and competitive position and very proactive stance towards building market share in the run up to stakeholder pensions coming on stream in 2001. A major component of this is pooled managed pension funds, where improved investment returns have been instrumental in attracting new business.
Sales of annuity products have increased by 5% to Ł420 million, reflecting continued growth in sales of with-profit annuities of Ł71 million (1999: Ł15 million), and our continued policy of pricing conventional annuities for profit as well as volume.
Sales of our Cat-standard Isa range continue to be very attractive to investors and have increased over 500%, reflecting the investment made in this business.
Following the merger of CGU and Norwich Union, a single marketing group will be launched in October 2000 and, until that date, the two existing marketing groups will continue to operate as separate units. The product range and branding announcements in respect of the future single marketing group will be made in the lead up to the launch date. The new range will represent the best benefits and product features from both long-term savings businesses.
Partnerships and strategic alliances with a range of other leading UK brand names promote further growth opportunities as additional distribution routes expand and open up. Alliances with leading United Kingdom brand names, The Royal Bank of Scotland and Tesco, will further promote strong and innovative business performance within the life, pensions and investment arena.
Having stated its intention to be a major provider of stakeholder pensions, CGNU became one of the first to launch a new pension product that meets the Government’s minimum standards in the pre-stakeholder pension phase – Your Pension @ CGU, with other complimentary product initiatives to follow. The pension offers investors charge-free policies until April 2001 and free transfers in, as well as a highly competitive charging structure for April 2001 onwards, designed to encourage persistency and higher investments. An associated development has been CGNU’s e-commerce functionality for this product that brings on-line pension applications to the market place for the first time.
France: The combined French businesses produced excellent figures, on the back of the performance established in the first quarter with further strong growth in unit-linked products. New single premiums, which dominate the market, increased by 49% to Ł968 million, ahead of overall market growth. AFER, the largest savings organisation in France, increased sales of its bond products by 14% over the first six months of 1999. Sales of SFER, the unit-linked product of AFER, increased sales by 240% to Ł177 million, continuing the trend established in the first quarter, to provide 33% of total AFER sales.
Total sales of unit-linked and other savings products were more than double the first six months of 1999, reflecting the trend towards unit-linked products following strong equity performance in 1999 and the low interest rate environment.
Ireland: The CGNU Irish business represents the combination of Hibernian, CGU and Norwich Union Ireland and positions us as one of the top five providers of new life and pensions business. The combined businesses produced a set of excellent figures continuing the performance reported in the first quarter. New single premium sales, up 74% over first half 1999, include a Ł51 million contribution from Hibernian and reflect the continued success of the Norwich Union Celebration Bond and CGU bond products.
The increase in regular premium sales, up 170% over first half 1999, principally reflects the impact of the Hibernian acquisition earlier this year.
Netherlands: Delta Lloyds Nuts Ohra has a market share of around 6%, making it the third largest life and pensions insurer in the Netherlands. Single premiums were up 33% at Ł203 million, reflecting the inclusion of Ł41 million from the acquisition of Nuts Ohra following good individual pensions sales. Regular group pensions sales were up 12% although sales of individual life products were slower ahead of planned tax changes.
Poland: The Polish pensions business reported regular premium sales of Ł109 million (1999: Ł2 million) in the first six months of 2000. Of the reported regular premiums, Ł99 million (1999: Ł2 million) was contributed by the CGU business, the market leader for private pensions, representing the processing of 507,000 pensions cases. The regular premium sales reported by the Norwich Union business of Ł10 million represented the processing of 65,000 pension cases.
Further new pension customers have been won as they enter the market, attracting 46,000 in our CGU business and 9,000 in our Norwich Union business in the first six months of this year.
The combined Polish life operation comprises CU Polska, a leading life business, together with the Norwich Union life business launched in January 2000. CU Polska maintains its overall market position second only to PZU, the former state insurer. The combined business sales were lower than in the same period in 1999, reflecting the previous high level of activity in the pensions and life market. Market share based on total premium income has been maintained at around 20%, including the Ł2 million regular premium contribution from the Norwich Union business. Long term growth prospects remain very good, with less than 20% of employed people having an individual life policy.
Spain: Our Spanish businesses returned a near 200% increase in single premium sales, reflecting the launch of unit-linked life and savings products in the second half of 1999. On 19 May 2000 we announced a new bancassurance partnership with Bancaja, Spain’s fourth largest savings bank, where we will acquire 50% of the share capital and control of Bancaja’s life insurance subsidiary, Aseval. The combined operations will be a top ten life and pensions provider in Spain, with exclusive access to Bancaja’s distribution network of around 1,000 branches. This transaction is subject to regulatory approval and we expect a contribution to new business to commence in the second half of this year.
Other Europe:
Italy: We continue to explore opportunities to build our bancassurance distribution network. Our partnership with Banca delle Marche, launched in September 1999, has continued to produce strong single premium sales of Ł36 million. Activity with our bancassurance partner, Banco Popolare di Lodi, has by contrast focussed on regular premium sales that increased by 200% to Ł3 million. The reduction in Other Europe when compared to 1999 principally reflects the cessation of our exclusive bancassurance agreement with Credito Italiano last year.
Other businesses: The initial European version of Navigator, based upon the internet-enabled fund of funds service operated by our Australian business, boosted single premium sales by Ł20 million. This business offers tax-efficient products to high net worth individuals and operates out of Dublin.
Our business in Luxembourg has continued the strong performance reported in quarter one for sales of UCITS (collective investment schemes), up 114%. Our German business has seen annual premiums up 42% to Ł19 million and single premiums of Ł26 million. Good progress has also been made in our smaller businesses in Belgium, Czech Republic, Portugal and Turkey. In Turkey, we continue to prepare for the new opportunities presented by private pensions legislation currently before parliament, and hope to be one of the first companies to be granted a pensions licence later this year. Annual premium sales were up by 64% to Ł12 million.
International: The result from International consists principally of our businesses in Australia and North America. Our Australian life and pensions business posted a 23% increase in single premium business to Ł123 million and a 50% increase in regular premium business to Ł7 million. Our Australian unit trust business reported an 18% increase to Ł166 million.
Our United States business reported sales of Ł94 million.
Total sales from the Norwich Union fund of funds Navigator product in Australia increased to Ł376 million, an increase of 33% on 1999 levels, giving total funds under administration of Ł2.2 billion.
On 14 June 2000 we announced the intention to sell our Canadian life businesses, which contributed Ł7 million of regular and Ł19 million of single premium sales.
Notes to Editors
- CGU and Norwich Union merged on 30 May 2000 to create CGNU plc the UK's largest insurance group and one of the top-five life insurers in Europe with substantial positions in other markets around the world making it the world’s 6th largest insurer based on gross worldwide premiums.
CGNU's principal business activities are long-term savings, fund management and general insurance with worldwide premium income and retail investment sales of Ł26 billion and assets under management of more than Ł200 billion.
From October, the combined life and pensions, retail fund businesses and general insurance in the UK will operate under the Norwich Union brand, while the institutional investment business will operate under the Morley Fund Management brand.
- The worldwide new business figures presented are combined CGU and Norwich Union.
- New business figures have been translated at average exchange rates applying for the period.
-
6 months to 30 June
20006 months to 30 June 1999
France - francs Ł1 = 10.73
Ł1 = 9.78 Ireland - punts Ł1 = 1.29
Ł1 = 1.17 Netherlands - guilders Ł1 = 3.60 Ł1 = 3.29 Poland - zloty Ł1 = 6.65 Ł1 = 6.25 Spain - pesetas Ł1 = 272.16 Ł1 = 247.75 - All growth rates are quoted in local currency.
- 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% of single premiums.
Annual premium equivalent 6 months to 30 June 2000
Local currency growth
Łm United Kingdom IFA 422
28%
Partnerships/Direct 119
8%
541
23%
France 118
35%
Ireland 45
116%
Netherlands 52
4%
Poland 132
308%
Spain 9
6%
Other Europe 72
(44%)
International 62
7%
Total long-term savings 1,031
25%
Single
Regular
6 months to 30 June 2000
6 months to 30 June 1999
Local currency growth
6 months to 30 June 2000
6 months to 30 June 1999
Local currency growth
Łm Łm Łm Łm United Kingdom Individual pensions 479
360
33%
80
67
19%
Group pensions 312
193
62%
45
32
41%
Mortgage -
-
-
19
26
(27%)
Annuities 420
401
5%
-
-
-
Bonds and savings 1,660
1,334
24%
3
3
-
Other life 95
45
111%
35
23
52%
PEPs/ISAs/unit trusts/OEICS 510
464
10%
11
8
38%
3,476
2,797
24%
193
159
21%
France AFER (excluding unit-linked) 363
351
14%
-
-
-
Unit-linked & other savings 540
288
106%
8
9
(3%)
Protection business 65
76
(6%)
13
16
(6%)
968
715
49%
21
25
(5%)
Ireland Life 164
112
61%
7
3
140%
Pensions & annuities 34
13
177%
18
7
184%
198
125
74%
25
10
170%
Netherlands Individual pensions 116
41
210%
-
-
-
Group pensions 50
88
(39%)
9
9
12%
Life 37
38
9%
23
29
(15%)
203
167
33%
32
38
(8%)
Poland Life & savings 5
6
(8%)
22
32
(27%)
Pensions -
-
-
109
2
5,699%
5
6
(8%)
131
34
312%
Spain Life & savings 32
9
294%
4
4
28%
Pensions 5
5
13%
1
4
(79%)
37
14
197%
5
8
(29%)
Other Europe Life & pensions 183
693
(71%)
42
64
(28%)
UCITS and other 121
57
114%
-
-
-
304
750
(56%)
42
64
(28%)
International Life & pensions 228
223
2%
23
22
5%
Unit trusts 166
144
18%
-
-
-
394
367
8%
23
22
5%
Total
long-term savings5,585
4,941
17%
472
360
37%
Analysis of UK long-term savings sales by distribution channel
IFA
- life and pensions products
2,419
1,776
36%
138
116
19%
- investment products
360
333
8%
6
2
200%
Partnerships/Direct
- life and pensions products
547
557
(2%)
44
35
26%
- investment products
150
131
15%
5
6
(17%)
Total UK
long-term savings3,476
2,797
24%
193
159
21%