The Royal Bank of Scotland Group PLC and CGNU PLC Announce Financial Terms of Bancassurance Joint Ventures

Article date: 17 July 2000

The Royal Bank of Scotland Group plc ("RBSG") and CGNU plc("CGNU") have agreed the terms of their bancassurance partnerships,comprising Royal Scottish Assurance plc ("RSA") and NationalWestminster Life Assurance Limited ("NWLA").

As part of the arrangement, both RSA and NWLA will berestructured through joint venture agreements, with both RBSG andCGNU having a 50% share of each business. RBSG and CGNU will alsoseek to identify opportunities to develop their respectivebusinesses through further commercial co-operation.

The parties have agreed that CGNU will pay £600m to RBSG for its50% stakes, valuing the RBSG bancassurance business at £1.2bn, witha total embedded value currently estimated at £630m. It isanticipated, subject to regulatory approval, that the jointventures will be operational during 2000.

Commenting on the announcement, Fred Goodwin, Group ChiefExecutive of RBSG said:

"Today's announcement confirms the commitment we made to themarket in November 1999 in respect of bancassurance. Since thattime, we have enjoyed excellent working relationships with CGNU andcan already see further possibilities for future co-operation. Webelieve that £600m represents a fair value for 50% of thisbusiness. We are confident that CGNU's first class track record indesign and delivery of quality products will greatly benefit ourcustomers."

Bob Scott, Group Chief Executive of CGNU said:

"This joint venture will combine the market leading lifecapability of CGNU in the UK with RBSG's enormous power in theretail market. Together we will set new standards in UKbancassurance."



Benny Higgins, Deputy Chief Executive, Retail Banking
Tel: +44 (0)131 523 0807

Chris Wermann, Deputy Group Director, Communications Tel: +44(0)20 7920 5178


Philip Scott, Executive Director UK Life
Tel: +44 (0)1904 452 827

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

RBSG is a leading European financial institution and in March thisyear we acquired NatWest. Within the UK RBSG is number 1 incorporate banking, number 1 in private and offshore banking andnumber 2 in retail banking. In the UK RBSG has 15 million personalcustomers.

Contained within the Group there are a number of brandsincluding The Royal Bank of Scotland, NatWest, Direct Line, Lombardand Coutts. In addition RBSG has a number of joint venturerelationships - Tesco, Virgin, Shell and Scottish Power as well asa strategic alliance with BSCH. In November 1999 a strategicpartnership in bancassurance was announced with CGU (now CGNU).

CGNU was formed by the merger of CGU and Norwich Union, whichcompleted on 30 May 2000. CGNU is the largest UK based insurancegroup and a top five European life insurer with worldwide premiumincome and retail investment sales of £26bn. It is the secondlargest UK based fund manager with over £200bn of assets undermanagement.

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