Presentation to analysts on CGNU s UK general insurance business

Article date: 17 May 2001

CGNU plc held a presentation today on its UK general insurancebusiness, branded Norwich Union Insurance ("NUI"). NUI is theleading UK general insurer with a market share of some 19% and netpremiums of £5 billion in 2000. In total, the business accountedfor 18% of the Group's ongoing net written premiums in 2000 and 55%of the Group's general insurance premiums.

Commenting on the progress at Norwich Union Insurance, PatrickSnowball, Chief Executive, said:

"We are building a powerful general insurance business withstrong and sustainable competitive advantages in claims handling,risk selection, expenses and brand. The integration benefits are ontrack and results are improving towards the Group's target of a102% combined operating ratio by the end of 2001."

Slides from the presentation are available on the Group'swebsite under the investor section.


Analysts / investors
Steve Riley, Investor Relations Director
+ 44 (0) 20 7662 8115
Hayley Stimpson, Director of External Affairs
+ 44 (0) 20 7662 7544
Alex Child-Villiers, Financial Dynamics+ 44 (0) 20 7269 7107

Key points from the presentation:-

• Re-shaping the portfolio

NUI has re-shaped its portfolio over the last year in line withits strategic focus on personal and small commercial lines or wherepricing was inadequate. A reduction in large commercial risks,including the exit of the London Market, has increased the personallines proportion of the portfolio to 67% by the end of the firstquarter of 2001, from 59% 12 months previous.

• Rates remain firm

Rates across all classes of business remain firm. At the end ofthe first quarter, private motor rates were up 15% year on year, up20% for commercial motor, up 7% for commercial property, up 4% forhomeowners and up 15% for liability, where rates continue tostrengthen.

Pricing and underwriting are centralised, which ensures strictcontrol on risk selection and satisfactory rates per risk.

• The most efficient of the large UK insurers

At 10.7% at the end of the first quarter, NUI's expense ratio isthe lowest in the UK of the large insurers. There is a proven trackrecord in driving operational efficiency and the pro-formaequivalent expense ratio for NUI stood at over 14% in 1997. Theimprovement is after expensing the investment in market leadingtechnology and processes (eg Total Incident Management).

• Results are improving

First quarter operating profits were up 27% to £100m, withresults responding to targeted rating action and rigorous riskselection. The combined operating ratio improved to 105% (Q1 2000107%) and is on track to achieve the Group's target of 102% by theend of 2001.

• Leveraging a competitive advantage in claimshandling

The ex-Norwich Union business had a competitive advantage in itsTotal Incident Management ("TIM") claims handling process forpersonal lines. This is now being rolled out across the enlargedbusiness. The system enables NUI to control the cost of claims,whilst offering its customers an excellent service following aclaim.

• Reducing volatility through reinsurance

NUI has in place the largest UK catastrophe programme in the UK.This restricts the aggregate losses retained by NUI from a singlecatastrophe event to a maximum of £200m and individual property,motor and liability claims to £5m.

• Leveraging NUI's scale advantage

NUI's scale advantages:-

- purchasing power reducing the cost of claims.
- improved risk selection and pricing using the largest data baseof any UK insurer.
- resources to invest in technology that leads the market (eg TotalIncident Management).
- market share to actively manage portfolio.

• Multi-distribution capability

NUI has a multi-distribution capability in personal lines with aleading position across the broker, corporate partnership andretail direct distribution channels. This includes a growingpresence in e-commerce where NUI has sold over 70,000 policies(personal motor, household and travel) via the internet and otherdigital channels and quotes via the internet are running at some100,000 per month.

• Integration is on track

Key points:-
- rationalised product range (300 to 71 products) was launched on 2October 2000.
- all staff in place.
- reinsurance programme in place for the combined business.
- re-shaped the portfolio.
- moving to a common pricing platform by July 2001.
- conversion of some 2 million policies onto one personal lines andone commercial lines system on track to complete by the end of2001.
- retained income levels and corporate partnerships.
- on track to achieved target annualised cost savings of £97million by the end of the year.

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