Norwich Union worldwide new long-term savings business figures: three months to 31 March 2000

Article date: 19 April 2000

Highlights

  • Worldwide new business premiums increased by 69% (in localcurrency) to £1.2 billion
  • UK new business premiums increased by 86% to £882 million
  • Worldwide annual premium equivalent* up 58% (in localcurrency) to £179 million
  • UK annual premium equivalent* up 67% to £122 million, a recordquarter
  • UK Isa, Pep, Oeic and unit trust sales up over 900% in annualpremium equivalent* terms
  • European annual premium equivalent* growth of 63% (in localcurrency)

*Annual premium equivalent is total new annual premiums plus 10%of single premiums.

Norwich Union group chief executive Richard Harvey said:

"Norwich Union has again delivered an outstanding increase innew worldwide long-term savings sales for the first three months of2000. These figures reflect the momentum built up in 1999 and haveproduced a 69% increase in local currency in new business premiumsto £1.2 billion (1999: £698 million).

"An enhanced marketing strategy and our continued investment inthe Norwich Union brand have been key contributors in achievingthis year-on-year success.

"The promotion of Norwich Union's investment expertise and oursupport for Cat-standards is also paying off. Sales of Isas in thefirst quarter considerably outstripped sales of Peps in theequivalent period last year, with Norwich Union being a significantplayer in the Isa market.

"Further afield, results from our overseas operations reflect anexcellent first quarter, with our European operations achieving agrowth of 63% in local currency in annual premium equivalent terms.As our overseas operations continue to increase in significance, welook forward to taking advantage of the enhanced distributionopportunities offered by CGU's international operations.

"We are delighted that our Navigator product, excluded from theheadline figures, continues to go from strength to strength withgrowth of 39%."

United Kingdom (up 67%)

New long-term savings business for the first quarter of 2000achieved 67% growth over the same period in 1999 on an annualpremium equivalent basis. Sales reached £122 million annual premiumequivalent in a record quarter for Norwich Union (1999: £74million).

Single premium bond sales of £304 million were up 85% (1999:£164 million), with average daily sales of £4.8 million. Thisexcellent performance reflects the attractiveness of the productrange and our continuing strong relationship with IFAs.

Individual pensions sales of £20 million annual premiumequivalent were up 43% (1999: £14 million), reflecting increasedmarketing efforts. Growth in group personal pensions of 38% to £12million annual premium equivalent (1999: £9 million) is a pleasingperformance in difficult conditions, which will prevail until theintroduction of stakeholder pensions. Norwich Union is planning tointroduce a range of new pensions products during 2000 that embracestakeholder principles and make further use of new technology. Thisis part of an ongoing programme of development to ensure optimumpositioning for the launch of stakeholder pensions in 2001.

Sales of other group pensions of £16 million annual premiumequivalent represent a 129% increase (1999: £7 million). Thisstrong performance results from successes in attracting pooledmanaged pension funds single premium business of £57 million (1999:£14 million).

Annuity sales of £157 million have increased by 5%, reflectingsales of with-profit annuities of £22 million (1999: nil) and ourcontinuing policy of pricing conventional annuities for profit.

Norwich Union is a leader in the creditor market, with creditorlife and disability business contributing £8 million annual premiumequivalent, an increase of 167% (1999: £3 million).

New investment funds business has achieved single premium salesof £143 million (1999: £15 million) in the run up to the end of thetax year. The Higher Income Plus fund, part of Norwich Union'sCat-standard ISA range, continues to prove very attractive toinvestors, attracting £62 million in sales. Over the quarter, UKand European equity fund performance has been outstanding, with theNorwich UK Growth fund ranked as the number one in its sector overthe last 3 months.

Europe and International (up 43%)

Norwich Union's annual premium equivalent new business inoverseas markets has grown by 43% (in local currency) to £56million.

  • Europe (up 63%)

    Annual premium equivalent of £38 million for our Europeanoperations reflects excellent first quarter growth of 63% (inlocal currency). Single premium new business has increased by 73%to £111 million (in local currency) and regular premium newbusiness by 59% (in local currency) to £27 million.

    Single premium growth has been driven by the Celebration Bondproduct in Ireland and in France by the 1999 award winning unitlinked multi-fund contract. In Ireland, exceptional growth of 79%(in local currency) in single premium sales has been achieved,and early indications are that the recently launched 2000 versionof the Celebration Bond will continue this growth. In France,single premium sales were up 61% (in local currency) to £45million, and future performance is expected to benefit fromrecently winning a coveted award for the best European EquitiesFund in 1999.

    The increase in regular premiums reflects a £9 millioncontribution from Poland, representing the value of pensionpolicies which have been redirected from the State Scheme, and a20% growth (in local currency) in Irish pensions sales.

    Late in the first quarter of 2000 we launched Norwich UnionInternational, an offshore life and investment business based inDublin. This innovative proposition, based on the Navigatorconcept in Australia offers tax-efficient products to high networth individuals and has generated significant interest sincelaunch.

  • International (up 13%)

    Increased sales of our unit trust and pension products inAustralia contributed to an annual premium equivalent growth inInternational of 13% (in local currency) to £18 million.

    Although not included in the new business figures, Navigatorsales in Australia increased by 39% (in local currency) over 1999to A$424 million, giving total funds under administration ofA$5.2 billion. Further benefits from our Portfolio Partners andPaladin acquisitions were demonstrated by a 25% increase (inlocal currency) in mandate sales to A$288 million.

- ends -

Enquiries:

Analysts: Philip Scott, Chief Executive (UK Long-Term Savings)on 01603 683936

Rebecca Burrows, Investor Relations & CorporateCommunications Director on 01603 680117

Media: James Duffell or Louise Zucchi on 01603 683820

Notes to Editors

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

20001999
Australia£1 = A$2.5463£1 = A$2.5762
France£1 = FF10.6818£1 = FF9.5596
Ireland£1 = IR£1.2825£1 = IR£1.1478
Poland£1 = PLZ6.6061N/A
Spain£1 = Pta270.9485£1 = Pta242.4832

The new business results cover the period ended 31 March2000.

Annual premium equivalent (APE) is an industry standard forcalculating life, pensions and investments new business levels. Itis the total of new regular premiums plus 10% of singlepremiums.

Annual Premium Equivalent

3 months to 31 March 2000

3 months to 31 March 1999

3 months to 31 March 1999

£m

£m

£m

(at 2000 Exchange Rates)

United Kingdom

Regular

37.0

29.0

29.0

Single

70.1

43.0

43.0

107.1

72.0

72.0

Europe (excluding UK)

Regular

27.0

17.0

19.0

Single

11.1

6.4

7.2

38.1

23.4

26.2

International

Regular

4.0

3.0

3.0

Single

5.7

5.3

5.3

9.7

8.3

8.3

Total life and pensions

154.9

103.7

106.5

Unit trusts, Oeics, Peps and Isas

United Kingdom

15.3

1.5

1.5

Europe

0.0

0.0

0.0

International

8.5

7.8

7.7

Total long-term savings

178.7

113.0

115.7

UNAUDITED Analysis of Worldwide New Business

Regular

Single

3 months to 31 March 2000

3 months to 31 March 1999

3 months to 31 March 2000

3 months to 31 March 1999

£m

£m

£m

£m

United Kingdom

Life

Unitised with-profit and unit-linked

2

4

304

164

Non-profit

8

5

10

3

10

9

314

167

Personal Pensions

Conventional with-profit

-

-

14

9

Unitised with-profit and unit-linked - individual

7

6

111

67

Unitised with-profit and unit-linked - group

11

8

9

6

Non-profit

-

-

-

-

18

14

134

82

Group Pensions

Conventional with-profit

2

1

2

1

Unitised with-profit and unit-linked

5

3

74

17

Non-profit

1

1

-

-

8

5

76

s

Annuities

-

-

157

150

Other

1

1

20

13

37

29

701

430

Europe (excluding UK)

Ireland

7

7

52

33

France

8

9

45

31

Spain

2

2

9

7

Poland

9

-

-

-

Other European Union

1

1

5

1

27

19

111

72

International

Australia

3

2

56

52

Other

1

1

1

1

4

3

57

53

Total life and pensions

68

51

869

555

Personal Equity Plans and Isas

1

-

92

11

Unit trusts and Oeics - UK

-

-

51

4

- Europe

-

-

-

-

- International

-

-

85

77

Total long-term savings

69

51

1,097

647

Analysis of UK long-term savings sales by distributionchannel

IFA - life and pensions products

29

25

658

404

- investment products

1

-

97

6

Direct - life and pensions products

8

4

43

26

- investment products

-

-

46

9

Total

38

29

844

445

UK unitised with-profit and unit-linked pension single premiumsshown above include NICO rebates of £22 million (1999: £8million).

New business premiums from Europe and International businesseshave been translated at the average exchange rates applying for theperiod. The impact of exchange rate movements in 2000 results inthe restatement of the 1999 total regular premiums from £51 millionto £49 million and from £647 million to £640 million for totalsingle premiums.

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