1999 Worldwide life & savings new business

Article date: 26 January 2000

  • Worldwide new business increased by 33% to£7,094m.
  • New annual premiums up 76% to £744m, including £282m fromPolish pensions.
  • Single premium sales 29% higher at £5,580m.
  • ISA, PEP, unit trust and UCITS sales up 29% to£770m.

Bob Scott, Group Chief Executive, commented:

"Our life and savings businesses produced an excellentperformance in 1999 with new business sales up 33% to a record £7.1billion. There was strong life and pensions growth in the UK, goodperformances in France and the Netherlands, and our Polish businesscaptured a large share of the new pensions market, with new annualpremiums totalling £282m in 1999.

We continue to build on the Group's strong position in the UKand Continental European life and savings markets and broaden ourmulti-distribution capability."

Enquiries: 
Media:
Robbie Graham,
Director of Life Development
+44 (0) 171 662 2050
Analysts/Investors:
Steve Riley,
Head of Investor Relations
+44 (0) 171 662 8115
UK Trade Press:
Fran Elliot,
Public Relations Manager
01904 452 172
07968 934035 (mobile)

 New SinglePremiumsNew AnnualPremiumsInvestment Sales(ii)TOTAL
 1999
£m
Local
Currency
Growth
%
1999
£m
Local
Currency
Growth
%
1999
£m
Local
Currency
Growth
%
Local
Currency
Growth
%

United Kingdom2,6553417116413633
France1,328201312  20
Netherlands (iv)34016849  15
Italy7682142(14)  19
Poland - life131635712  25
Poland - pensionsn/an/a282n/a  n/a
Germany90n/a39n/a  n/a
Other Europe1851401221129555
Rest of World201(5)4416  (1)

TOTAL5,58029744767702933


Notes:

  1. Average exchange rates used and premiums are gross ofreassurance
  2. Includes ISAs, PEPs, unit trusts and UCITS (collectiveinvestments sold throughout Europe and Asia).
  3. Growth excludes sales from businesses disposed of.
  4. Figures include £3m in single premiums and £0.5m in annualpremiums from Nuts Ohra. Excluding Nuts Ohra, single and annualpremiums were 15% and 8% higher respectively.

UK : We were pleased to announce in November 1999 theagreement to acquire a 50% shareholding in the Royal Bank ofScotland's life assurance subsidiary, Royal Scottish Assurance. CGUwill also provide administration and asset management services andthe joint venture is due to commence in the first half of 2000.

CGU Life's total sales of new life, pensions and investmentbusiness rose by 33% to £3.5bn, benefiting from strong sales in thefourth quarter of 1999. There was good growth through IFAs andbuoyant sales through our other channels (building societypartners, estate agents and direct business), with NAPI sales up14% and 36% respectively (NAPI is new annual premiums plus a tenthof new single premiums and investment products).

New single premiums increased by 34% to £2,655m, mainlyreflecting a 52% increase to £1,852m in sales of our flagshipinvestment product, the Portfolio Bond. Our focus on pensionsbusiness has increased single premium pensions sales by 14% to£740m. This included an 18% increase to £400m in individual pensionsales and new group pensions sales were up 9% to £340m.

New annual premiums were up strongly in the discrete fourthquarter and totalled £171m for the year (1998 £170m). Our clearpensions stance, allowing all customers who have bought annualpremium personal pensions since CGU Life was launched to enjoypenalty free transfers into a new Stakeholder pension when it isintroduced, has enabled us to significantly outperform a decliningpensions market, with annual premium pensions up 10% at £110m. Thisincluded a 16% increase to £66m in individual pension sales andgroup sales of £44m were 2% higher. Mortgage protection sales werehigher in 1999, offset by lower mortgage endowment sales of £33m(1998 £45m).

New investments into ISAs, unit trusts and PEPs were 36% higherat £641m. In 1999, strong PEP sales were maintained and we made asmooth transition to ISAs. The CGU ISA had a successful launch inApril with sales of £212m achieved in 1999, and we rank second inthe corporate bond ISA market.

France : Strong growth continued into the fourth quarterproducing a good increase for the year. In a market dominated bysingle premium sales, new single premium business at CGU France wasup 20% to £1,328m, against market growth of some 13%. AFER'sexcellent return record helped boost bond sales by 45% to £712m,and the recently announced investment yield of 6.23% for 1999 willensure a competitive position in 2000. AFER is the largest savingsorganisation in France, with over 500,000 members, and over £14bnof funds under management. SFER, the unit-linked product of AFER,continued to grow, representing 16% of AFER's total new businessand 7% (1998 c.2%) of AFER's total funds.

Unit-linked sales (including £135m in unit-linked AFER sales)and other savings products were up 2% at £482m and group protectionsales were £134m (1998 £144m).

Netherlands : Delta Lloyd Nuts Ohra produced a goodperformance in 1999, boosted by good sales in the fourth quarter.New annual premiums increased by 9% to £84m, reflecting strongsales of Delta Life, our unit-linked universal life product, whichwere up 37% to £18m. Increased pensions business, including theacquisition of a new group pension scheme during the year, boostedsingle premiums by 16% to £340m.

The acquisition of Nuts Ohra was completed in the fourth quarterof 1999 and it contributed £0.5m and £3m in annual and singlepremium sales respectively. The combined company, Delta Lloyd NutsOhra, is a major life and pensions player, ranking third in thisimportant market.

Italy : Total new business sales were higher than in1998, with single premium sales increasing to £768m and annualpremiums of £42m.

Strong growth in sales of our unit-linked savings productscontinued through our newest bancassurance arrangements. Bancadelle Marche, which sells through 250 branches based in the centreof Italy, has generated £55m in single premiums since its launch inSeptember 1999. Banca Popolare di Lodi, where we sell through 250branches, mainly in the north and south of the country, achieved£5m (1998 £2m) in annual premiums and £34m (1998 £3m) in singlepremium sales.

Poland : In Poland, we have achieved exceptional successin capitalising on the major opportunity provided by theprivatisation of pensions provision. We are the leading pensionsbusiness, capturing a market share of over 20% by number ofcustomers and 30% by funds under management. New annual pensionpremiums of £282m were received in 1999, representing theprocessing of 1.6m pensions cases, with a further 0.5m applicationsin the pipeline to be processed during 2000.

The pensions growth has built on the success of our existinglife operations and created a major business in Poland, with acustomer base of over 3 million and the potential to cross sell ourproducts.

In a year where our sales team focused on the pensionsopportunity, a 12% increase in annual premium life sales to £57mand a 163% increase to £13m in single premiums, represents a goodperformance. Including both life and pensions sales, new annualpremiums were £339m for the year.

Germany : Berlinische Leben produced strong annualpremium sales of £39m, with £15m in the discrete fourth quarter (Q41998 £9m), reflecting new product launches and increased marketingactivity. Single premium sales of £90m were achieved reflectinggood sales of pension and annuity business. During 2000 we willcontinue to refocus the business to sell higher marginequity-linked and group pensions products.

In Ireland, excellent single premium investment bondsales of £145m were achieved in 1999 and the acquisition of TheHibernian Group provides new customers and additional distributionpower to market with-profits policies. We have been successfullydeveloping our Turkish business in recent years and now rankfourth in the market for new business, with annual premium sales130% higher at £16m in 1999. Our cross-border business inLuxembourg added £129m in UCITS sales following good fourthquarter sales.

In the United States, single premium sales were 6% lowerat £172m, reflecting good sales of a new deferred annuity productbeing offset by reduced demand for immediate annuities. Followingour withdrawal from the unprofitable group health market, annualpremiums were 19% lower at £20m. In Canada, new annualpremiums were 28% higher at £7m reflecting increased sales ofprotection and annuity products and single premiums were 7% higherat £28m.

Asset Management

CGU is one of the top 20 fund managers in Europe, managingworldwide assets of over £125bn.

In 1999 we attracted over £8bn in new funds worldwide, including£7.1bn in new life and savings business and over £1bn in thirdparty mandate investments. Strong long term investment performancehelped to attract these funds, with our UK third party pension fundranking in the top quartile over the last 5 years.

Two of our main investment businesses won awards during 1999.The Financial Times named our UK business, Morley Fund Management,as the third best performer of all institutional fund managers ofthird party pension funds, and in France, Victoire Asset Managementwas nominated by the influential Mieux Vivre magazine as thecountry's best insurance asset manager.

Notes to Editors

  • CGU is Europe's 5th largest insurance group and the largest inthe UK (based on worldwide sales of some £18bn per annum).
  • Life and savings represents just over half of CGU's totalbusiness.
  • The geographical split of total life, pensions and retailinvestment sales for 1999 was:
  •  %
    United Kingdom49
    France19
    Netherlands6
    Italy11
    Poland5
    Germany2
    Other Europe5
    Rest of World3
     
     100
     
  • Distribution of UK life and savings products using NAPI (newannual premiums plus a tenth of new single premiums and investmentproducts) for 1999 was:
  •  %
    IFAs66
    Partnership/Direct

    34

     
     100
     
  • All growth rates are quoted in local currency.
  • CGU's 1999 results will be reported on 23 February 2000.
 New singlepremiumsNew annualpremiumsInvestment sales(ii)
 12months 12months 12months 
 1999
£m
1998
£m
Local
currency
growth
%
1999
£m
1998
£m
Local
currency
growth
%
1999
£m
1998
£m
Local
currency
growth
%

United
Kingdom
         
Individual pensions40034018665716   
Group pensions340311944432   
Mortgage---4049(18)   
Other life1,9151,323452121-   
PEPs/ISAs/unit trusts------64147336
 





   
 2,6551,974341711701   
France         
AFER (excl. unit-linked)71250145---   
Unit-linked & other savings4824832121116   
Group protection business134144(5)11(27)   
 





   
 1,3281,12820131212   
Netherlands (iv)         
Individual pensions89847---   
Group pensions174114562323-   
Universal life181613181337   
Other individual life4866(26)34351   
Group life1117(35)9822   
 





   
 3402971684799   
Italy         
Unit-linked64058811151139   
Savings, protection & other128601192739(29)   
 





   
 768648214250(14)   
Poland         
Life & savings1351635757122   
Pensions---282-n/a   
 





   
 13516333957560   
Germany         
Life & savings3014n/a189n/a   
Pensions & annuities6024n/a217n/a   
 





   
 9038n/a3916n/a   
Other Europe         
Life & pensions18579140121021   
UCITS------1291295
 





   
 18579140121021   
United States         
Life assurance69(32)914(41)   
Pensions & annuities166170(5)1110(14)   
 





   
 172179(6)2024(19)   
Other29277241384   
 








TOTAL5,5804,375297444317677060229
 









Notes:

  1. Average exchange rates used and premiums are gross ofreassurance
  2. Includes ISAs, PEPs, unit trusts and UCITS (collectiveinvestments sold throughout Europe and Asia).
  3. 1998 figures exclude sales from businesses disposed of.
  4. 1999 figures include £3m in single premiums and £0.5m inannual premiums from Nuts Ohra. Excluding Nuts Ohra, single andannual premiums were 15% and 8% higher respectively.

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