Worldwide long-term savings new business first nine months of 2000

Article date: 18 October 2000

  • Worldwide new business sales up by 14% to £9.0 billion
  • Total UK new business sales up by 22% to £5.5 billion
  • Strong growth achieved in major Continental Europeanbusinesses
  • Continued development of distribution channels in UK, Italyand Spain

Bob Scott, Group Chief Executive, commented:

"Strong new business sales of £9.0 billion worldwide wereachieved in the first nine months of the year. Excellent growth of22% was delivered by our UK business, which has recently launchedunder the new Norwich Union brand and now provides one of the mostcomprehensive product ranges in the market.

"Our Continental European businesses are capitalising on growthin unit-linked sales, with particular success in France. The salesreflect both organic growth and acquisitions, with a 27%improvement after removing the benefit in 1999 from the one-offPoland pensions opportunity and the ending of the Credito Italianobancassurance agreement.

"The growth achieved during a period of merger integrationdemonstrates the strength of our products and quality of ourpeople. This places our businesses around the world in a strongposition for continued future growth."

Enquiries:

Analysts/Investors:

Philip Scott, Group Executive Director UK Life
+44(0)19 0445 2827

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

Media:

Hayley Stimpson, Director of External Affairs
+44(0)20 7662 7544

Alex Child-Villiers, Financial Dynamics
+44(0)20 7831 3113

 

Single

Regular

Total

 

9 months to 30 September2000

Local currencygrowth

9 months to 30 September2000

Local currencygrowth

Local currencygrowth

 £m £m  
Life andpensions     
UnitedKingdom

4,557

24%

270

16%

24%

France

1,380

39%

30

3%

38%

Netherlands

313

39%

46

(13%)

29%

Ireland

299

36%

34

145%

42%

Poland

8

(11%)

156

(34%)

(33%)

Spain

71

264%

10

20%

191%

OtherEurope

283

(61%)

61

(21%)

(57%)

International

354

3%

37

(6%)

2%

      
Total life andpensions

7,265

17%

644

(6%)

15%

      
Investmentsales     
UnitedKingdom

692

11%

17

70%

12%

OtherEurope

157

82%

-

-

82%

International

242

(13%)

-

-

(13%)

      
Total investmentsales

1,091

10%

17

70%

11%

      
Total long-termsavings

8,356

16%

661

(5%)

14%

United Kingdom:

The UK life business was launched under the new Norwich Unionbrand on 2 October 2000. With a 10% market share it is the leadingUK life insurer and IFA provider. IFAs provide more than 75% of ourUK life and pensions business with an increase of 27% in newbusiness through the IFA channel for the first nine months of 2000.Despite the merger integration activity, service has beenmaintained at a high level.

Total UK new business sales increased by 22% to £5.5 billionduring the first nine months of 2000 and in Annual PremiumEquivalent terms were 21% higher at £812 million.

Single premium life and pension sales increased by 24% to £4.6billion. Single premium Bonds and Savings sales continue to performstrongly with an increase of 27% in new business to £2.6billion.

New regular premiums increased by 16% to £270 million, includingan increase in term assurance sales of 144%, where the combinedcompany is the market leader. Mortgage business sales at £30million are down 29% on 1999 reflecting the decline in mortgageendowment business. It is our intention to continue to be a highvolume player in this market, delivering first class value tocustomers and focusing on mortgage protection business.

Total individual pension sales at £886 million increased by 37%over 1999, while total group pension sales at £460 million were up35% over the same period reflecting the success of ourpre-stakeholder products. Pooled managed pension fund businesscontinues to account for a high proportion of this increase.

Annuity single premium sales at £612 million were down 10% on1999, reflecting a continued policy of pricing annuities for profitas well as volume. Sales of with-profit annuities continued to growsignificantly at £98 million (1999: £33 million).

Single premium investment sales are up 11% to £692 million whileregular premiums are up 70% to £17 million reflecting strong growthin ISA sales.

The launch of the new Norwich Union brand was accompanied by theunveiling of over 50 life, pension, investment and healthcareproducts positioning Norwich Union as a leading UK player. This isthe largest product range of any life insurer, the best of breedfrom the merged CGU and Norwich Union businesses and representsexcellent value for money. Attractive launch terms and enhancementshave been incorporated across the range of products, backed by astrong advertising campaign designed to rapidly consolidate thebrand.

Stakeholder pensions remain a top priority, and having statedthe intention to be the leading stakeholder provider, Norwich Unionbecame the first pension provider to apply for stakeholderregistration on 1 October. This represents the first step inenabling employers to designate our stakeholder pension as thescheme for their workforce.

Norwich Union continues to invest in technology to improveoperational efficiency. Our aim is to be in a position to processas much as 50% of our new business electronically, through "notouch" administration, by the end of next year.

While emphasising and growing our commitment to the IFA channel,Norwich Union will operate on a multi-distribution basis. Thisincludes a wide network of partnership arrangements, including analliance with The Royal Bank of Scotland which is due forcompletion in quarter four of this year, a salaried directsalesforce and a telesales operation.

France:

The French business continued to produce excellent figures withtotal new premiums increasing by 38% to £1.4 billion compared withthe first nine months of 1999.

New single premiums, which dominate the market, increased by 39%to £1,380 million, ahead of overall market growth.

Sales through AFER, the largest savings organisation in France,increased by 35% over the first nine months of 1999. Theunit-linked element of the AFER contract, principally SFER,increased sales by 206% to £256 million. This continues the trendestablished in the first half of this year, providing 33% of totalAFER sales and reflects the move towards unit-linked productsfollowing strong equity performance in 1999.

Abeille vie business also performed strongly over the first ninemonths of 1999 increasing sales by 41% to £636 million, boosted byunit-linked products.

Netherlands:

Delta Lloyd Nuts Ohra is a leading life and pensions insurer inthe Netherlands. Single premiums sales were up 39% at £313 million,including £64 million from Nuts Ohra, following strong individualpensions sales.

Regular premium sales were slower reflecting a reduction inannual premium market volumes ahead of tax reforms.

Ireland:

Hibernian Life & Pensions was launched in Ireland in October2000 combining the businesses of Norwich Union Life, Hibernian Lifeand CGU Life. The merger has created a top five provider of newlife and pensions business under the strong and establishedHibernian brand, with a current market share of 13%.

Total new single premium sales at £299 million were 36% higherthan the first nine months of 1999 and include a contribution of£69 million from Hibernian, acquired in January 2000. The increasein new annual premiums to £34 million (1999: £15 million)principally reflects the impact of Hibernian.

Poland:

Following the privatisation of the pensions market, CU Polskabecame the leading private pensions provider and by the end of 1999had captured 30% of this market measured by assets undermanagement. Over 70% of the total pension sales since launch inApril 1999, including sales from the Norwich Union business, wereachieved in the third and fourth quarters of 1999 and thisconcentration should be factored into any period to periodcomparison.

On 20 September 2000 we announced the sale of the Norwich Unionlife and pensions businesses in Poland to Sampo Insurance Companyplc for £143 million, the merger of CGU plc and Norwich Union plchaving led the Polish regulator to require CGNU to sell one of thetwo existing pension businesses. The Polish new business figuresinclude the Norwich Union life and pensions businesses, whichcontributed £14 million (1999: £22 million) in regular premiumpension sales and £3 million (1999: £nil) in regular premium lifesales.

Building on our success in 1999, CU Polska maintained itsleading market share attracting over 77,000 new pension customersduring the first nine months of 2000.

Following the intense activity last year when we grew our lifebusiness alongside pension sales, CU Polska has maintained itsshare of the life market at around 20%. Long-term growth prospectsremain very good with less than 20% of employed people having anindividual life policy.

Spain:

Our Spanish business is a top 10 life and pensions providerfollowing completion of our new bancassurance partnership withBancaja, Spain's fourth largest savings bank. The first two monthsof the partnership produced encouraging single premium sales of £22million and annual premium sales of £3 million. Our otheroperations in Spain produced single premium sales of £49 million,153% higher than 1999, reflecting the success of unit-linkedsavings products, while annual premium sales at £7 millionreflected lower pension sales.

Other Europe:

Italy: The relative decline in new business from 1999 from ourOther European businesses principally reflects the cessation of ourbancassurance agreement with Credito Italiano last year. Ourdistribution agreement with Banca Popolare di Lodi was extended inJuly and will progressively allow exclusive access to a totalnetwork of over 1,200 branches. Sales from the existing agreementcovering 250 branches have continued to focus on regular premiumsales, up over 150% on the same period last year. Our partnershipwith Banca delle Marche launched in September 1999 has also seenstrong single premium sales growth to £52 million following thesuccessful promotion of unit-linked products.

Other businesses: Norwich Union International, our Dublin-basedoffshore life and investment business, contributed £68 million tosingle premium sales. In Luxembourg sales of UCITS (collectiveinvestment schemes) advanced 82%. Our German business continued toproduce good growth in annual premiums, up 17% to £26 million;single premiums were £33 million. In Turkey annual premium sales at£17 million doubled over 1999, reflecting the continuingdevelopment of our direct sales force and the attractive productrange. We are optimistic about the new opportunities presented byprivate pensions and will be applying for a licence as soon as thepensions legislation is finalised.

Encouraging progress has also been made in Belgium, CzechRepublic and Portugal. On 11 October 2000, our Romanian operationcommenced trading offering a new life and savings opportunity,initially via a direct sales force and will market a range ofinnovative and flexible unit-linked life products.

International:

Sales from our Australian life and pensions business grew by 4%over the first nine months of 1999 to £202 million. Our lifebusiness in the United States saw single premium sales of £139million up 4% over the same period of 1999. On 14 June 2000 weannounced our intention to sell our Canadian life businesses whichhave contributed £11 million of regular and £25 million of singlepremium sales in 2000.

Navigator:

Continuing the trend established in prior periods, sales of ourNavigator product rose by 32% to £606 million giving total fundsunder administration of £2.2 billion.

Notes to Editors

1. CGU and Norwich Union merged on 30 May 2000 to create CGNUplc the UK's largest insurance group and one of the top-five lifeinsurers in Europe with substantial positions in other marketsaround the world making it the world's sixth largest insurer basedon gross worldwide premiums.

CGNU's principal business activities are long-term savings, fundmanagement and general insurance with worldwide premium income andretail investment sales of £26 billion and assets under managementof more than £200 billion.

From 2 October 2000, the combined life and pensions, retail fundand general insurance businesses in the UK operate under theNorwich Union brand, and the institutional investment businessoperates under the Morley Fund Management brand.

2. The worldwide new business figures presented are combined CGUand Norwich Union.

3. New business figures have been translated at average exchangerates applying for the period.

 

9 months to 30September
2000

9 months to 30 September1999

France -francs

£1 = 10.73

£1 =9.87
Netherlands -guilders

£1 = 3.60

£1 =3.31
Ireland -punts£1 =1.29£1 =1.18
Poland -zloty£1 =6.60£1 =6.32
Spain -pesetas£1 =272.12£1 =249.89

4. All growth rates are quoted in local currency.

5. Annual Premium Equivalent (APE) is a UK industry standard forcalculating life, pensions and investments new business levels. Itis the total of new regular premiums plus 10% of singlepremiums.

Annual premiumequivalent

9 months to 30 September2000

Local currencygrowth

 £m 
UnitedKingdom  
IFA

643

26%

Partnerships/Direct

169

4%

 

812

21%

   
France

168

31%

Netherlands

77

2%

Ireland

64

78%

Poland

157

(34%)

Spain

17

65%

OtherEurope

105

(34%)

International

97

(4%)

   
Total long-termsavings

1,497

6%


CGNU plc is a company registered in England No. 2468686.
Registered office St Helen's 1 Undershaft London EC3P 3DQ

Worldwide long-term savings new business

 

Single

Regular

 

9 months to 30 September2000

9 months to 30 September1999

Local currencygrowth

9 months to 30 September2000

9 months to 30 September1999

Local currencygrowth

 £m£m £m£m 
UnitedKingdom      
Individualpensions

764

551

39%

122

98

24%

Grouppensions

403

291

38%

57

51

12%

Mortgage

-

-

-

30

42

(29%)

Annuities

612

680

(10%)

-

-

-

Bonds andsavings

2,639

2,074

27%

4

5

(20%)

Otherlife

139

71

96%

57

36

58%

PEPs/ISAs/unittrusts/OEICS

692

624

11%

17

10

70%

 

5,249

4,291

22%

287

242

19%

       
France      
AFER (excludingunit-linked)

518

531

6%

-

-

-

Unit-linked &other savings

721

436

79%

10

14

(24%)

Protectionbusiness

141

112

36%

20

17

26%

 

1,380

1,079

39%

30

31

3%

       
Netherlands      
Individualpensions

167

67

172%

-

-

-

Grouppensions

90

118

(18%)

13

13

5%

Life

56

59

3%

33

44

(19%)

 

313

244

39%

46

57

(13%)

       
Ireland      
Life

250

220

24%

10

6

94%

Pensions &annuities

49

21

153%

24

9

176%

 

299

241

36%

34

15

145%

       
Poland      
Life &savings

8

9

(11%)

31

44

(26%)

Pensions

-

-

-

125

203

(36%)

 

8

9

(11%)

156

247

(34%)

       
Spain      
Life &savings

51

16

242%

8

5

65%

Pensions

20

5

332%

2

4

(37%)

 

71

21

264%

10

9

20%

       
OtherEurope      
Life &pensions

283

781

(61%)

61

84

(21%)

UCITS andother

157

86

82%

-

-

-

 

440

867

(45%)

61

84

(21%)

       
International      
Life &pensions

354

343

3%

37

37

(6%)

Unittrusts

242

287

(13%)

-

-

-

 

596

630

(4%)

37

37

(6%)

       
Total
long-term savings

8,356

7,382

16%

661

722

(5%)

       
Includinginvestment sales of

1,091

997

10%

17

10

70%

 

Analysis of UK long-term savings sales bydistribution channel

IFA

- life and pensions products

3,686

2,904

27%

214

173

24%

- investment products

503

412

22%

10

4

150%

Partnerships/Direct

- life and pensions products

871

763

14%

56

59

(5%)

- investment products

189

212

(11%)

7

6

17%

Total UK
long-term savings

5,249

4,291

22%

287

242

19%

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