Norwich Union PLC - Final Results - PART B
March 02 2000 - 2:08AM
UK Regulatory
RNS Number:5257G
Norwich Union PLC
2 March 2000
PART B
NORWICH UNION PLC
Preliminary Results for the twelve months ended 31 December 1999
Contents pages for PART B, PART C and PART D Page
Consolidated profit and loss account: long-term
business technical account 9
Consolidated profit and loss account: general
business technical account 10
Consolidated profit and loss account: non-technical account 11
Reconciliation of Group operating earnings to
profit on ordinary activities before tax 12
Consolidated statement of total recognised gains and losses 12
Reconciliation of movements in consolidated shareholders' funds 12
Summarised consolidated Group balance sheet 13
Consolidated cash flow statement 14
Analysis of Group operating earnings before tax based on
longer-term investment return 15
Basis of preparation 16
Principal exchange rates used 16
Change in accounting policy - dividend income 17
Acquisitions in 1999 17
Gross new and long-term premiums written and investment business 18
Gross and net premiums written - general business 19
Territorial analysis of balance on the technical account for
general business and underwriting result 20
Profit/(loss) from non-insurance operations 21
Taxation 21
Dividends 21
Earnings per share 22
Longer-term rates of investment return assumptions 23
Cash flow statement 25
Embedded value of worldwide long-term business 27
Group achieved profit 32
Supplementary information 33
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Page 9
Consolidated profit and loss account
Long-term business technical account
Restated
1999 1998
#m #m
Gross premiums written - continuing operations 4,781 3,675
Outward reinsurance premiums (137) (113)
------ ------
Earned premiums - net of reinsurance 4,644 3,562
Investment income (including net realised gains
on investments) 4,387 3,807
Unrealised gains on investments 2,093 2,804
Other technical income - net of reinsurance - 545
------ ------
11,124 10,718
====== ======
Claims paid - gross amount 3,611 3,595
- reinsurers' share (34) (62)
------ ------
3,577 3,533
------ ------
Change in the provision for claims
- gross amount (22) (10)
- reinsurers' share (1) (1)
------ ------
(23) (11)
------ ------
Claims incurred - net of reinsurance 3,554 3,522
------ ------
Change in long-term business provision
- gross amount 2,210 4,163
- reinsurers' share (73) 460
------ ------
Change in long-term business provision
- net of reinsurance 2,137 4,623
Change in other technical provisions
- net of reinsurance 1,721 839
------ ------
3,858 5,462
------ ------
Net operating expenses 574 371
Investment expenses and charges 44 60
Other technical charges - net of reinsurance 15 -
Tax attributable to the long-term business 205 179
Allocated investment return transferred to the
non-technical account 9 21
Transfer to the fund for future appropriations 2,470 723
------ ------
3,317 1,354
------ ------
10,729 10,338
====== ======
Balance on the technical account for long-term
business - continuing operations 395 380
====== ======
Balance on the technical account for long-term
business analysed between:
- continuing operations 410 380
- amortisation of acquired additional
value of in-force long-term business
(included within other technical charges) (15) -
------ ------
395 380
====== ======
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Page 10
Consolidated profit and loss account
General business technical account
1999 1998
#m #m
Gross premiums written - continuing operations 2,996 1,946
- discontinued
operations - 28
------ ------
Gross premiums written - total 2,996 1,974
Outward reinsurance premiums (213) (123)
------ ------
Net premiums written 2,783 1,851
Change in the provision for
unearned premiums - gross amount (122) (99)
- reinsurers' share 10 (3)
------ ------
Earned premiums - net of reinsurance 2,671 1,749
Allocated investment return transferred from the
non-technical account 229 183
------ ------
2,900 1,932
====== ======
Claims paid - gross amount 2,071 1,417
- reinsurers' share (109) (117)
------ ------
1,962 1,300
------ ------
Change in the provision for claims
- gross amount (56) (8)
- reinsurers' share (1) 42
------ ------
(57) 34
------ ------
Claims incurred - net of reinsurance 1,905 1,334
Changes in other technical provisions
- net of reinsurance - (4)
Net operating expenses 869 511
------ ------
2,774 1,841
====== ======
Balance on the technical account before change
in the equalisation provision 126 91
Change in the equalisation provision (27) (8)
------ ------
Balance on the technical account for general business 99 83
====== ======
Balance on the technical account for general
business analysed between:
- continuing operations 126 88
- discontinued operations - 3
- change in the equalisation
provision (27) (8)
------ ------
99 83
====== ======
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Page 11
Consolidated profit and loss account
Non-technical account
Restated
1999 1998
#m #m
Balance on the technical account for long-term business 395 380
Tax credit attributable to balance on long-term
business technical account 179 167
------ ------
Profit from long-term business operations before tax 574 547
Balance on the technical account for general business 99 83
Investment income (including net realised gains
on investments) 359 362
Unrealised gains on investments 77 51
Allocated investment return transferred from the
long-term business technical account 9 21
Investment expenses and charges (63) (71)
Allocated investment return transferred to the
general business technical account (229) (183)
Profit from non-insurance operations 10 9
Other charges:
- Corporate costs (41) (38)
- Amortisation of goodwill (15) (3)
Exceptional costs of integrating acquired undertakings (12) (35)
Exceptional profit on sale of subsidiary undertakings - 31
------ ------
Profit on ordinary activities before tax 768 774
Tax on profit on ordinary activities (183) (219)
------ ------
Profit on ordinary activities after tax 585 555
Equity minority interests (16) (10)
------ ------
Profit for the financial year 569 545
Dividends (275) (251)
------ ------
Retained profit for the year 294 294
====== ======
Earnings per share attributable to equity shareholders
Profit for the financial year - basic 29.0p 27.8p
Profit for the financial year - diluted 28.9p 27.7p
Operating earnings* - basic 28.0p 25.4p
Dividend per share 14.0p 12.8p
* Operating earnings are reported on the basis of a longer-term rate
of investment return, exclude the change in the equalisation
provision and are stated before integration costs, amortisation of
acquired additional value of in-force long-term business and
amortisation of goodwill.
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Page 12
Reconciliation of Group operating earnings to profit on ordinary activities
before tax
Restated
1999 1998
#m #m
Operating earnings before tax based on
longer-term investment return before integration
costs, amortisation of acquired additional value
of in-force long-term business and amortisation of
goodwill:
- continuing operations 761 712
- discontinued operations - 4
------ ------
761 716
Amortisation of acquired additional value of
in-force long-term business (22) -
Amortisation of goodwill (15) (3)
Exceptional costs of integrating acquired undertakings (12) (35)
------ ------
Operating earnings before tax based on longer-term
investment return after integration costs,
amortisation of acquired additional value of
in-force long-term business and amortisation of
goodwill 712 678
Change in the equalisation provision (27) (8)
Exceptional profit on sale of subsidiary undertakings - 31
Short-term fluctuation in investment return
- long-term business 29 21
- general business and other 54 52
------ ------
Profit on ordinary activities before tax 768 774
====== ======
Consolidated statement of total recognised gains and losses
Restated
1999 1998
#m #m
Profit for the financial year 569 545
Movement in internally-generated additional
value of in-force long-term business* 101 114
Foreign exchange gains/(losses) (78) 16
------ ------
Total recognised gains and losses arising in the year 592 675
====== ======
* Stated before the effect of foreign exchange movements which are
reported within the foreign exchange gains/(losses) line.
Reconciliation of movements in consolidated shareholders' funds
1999 1998
#m #m
Balance at the beginning of the year 5,713 5,098
Total recognised gains and losses arising in the year 592 675
Dividends (275) (251)
New share capital issued during the year 9 6
Merger reserve arising on reconstruction - 185
------ ------
Balance at the end of the year 6,039 5,713
====== ======
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Page 13
Summarised consolidated Group balance sheet
1999 1998
Assets #m #m
Goodwill 261 218
Investments 52,195 47,614
Additional value of in-force long-term business 2,492 2,430
Assets held to cover linked liabilities 7,666 5,926
Reinsurers' share of technical provisions 572 483
Debtors and other assets 1,981 1,993
Cash at bank and in hand 182 175
Deferred acquisition costs 1,054 1,007
------ ------
Total assets 66,403 59,846
====== ======
Liabilities
Capital and reserves
Called up share capital 193 192
Share premium account 1,808 1,800
Other reserves 3,422 3,353
Profit and loss account* 616 368
------ ------
Equity shareholders' funds 6,039 5,713
Equity minority interests 57 41
------ ------
6,096 5,754
Fund for future appropriations 8,765 6,336
Technical provisions 41,255 39,283
Technical provisions for linked liabilities 7,666 5,926
Provisions for other risks and charges 289 364
External debt 494 610
Commercial paper 388 172
Creditors and accruals 1,450 1,401
------ ------
Total liabilities 66,403 59,846
====== ======
* Distributable reserves in the company balance sheet of Norwich
Union plc at 31 December 1999 stood at #530 million
(31 December 1998: #560 million).
Approved by the Board on 1 March 2000.
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Page 14
Consolidated cash flow statement
Restated
1999 1998
#m #m
Operating activities
Net cash inflow from operating activities 705 470
Servicing of finance
Interest paid (55) (69)
Taxation
Corporation tax and income tax paid (37) (53)
Capital expenditure
Purchases of tangible fixed assets (66) (48)
Proceeds from sales of tangible fixed assets 10 5
------ ------
(56) (43)
------ ------
Acquisitions and disposals
Acquisitions of subsidiary undertakings net of
cash acquired (41) (376)
Disposals of subsidiary undertakings net of cash
divested - 102
------ ------
(41) (274)
------ ------
Equity dividends paid (257) (231)
Financing
Issue of ordinary share capital 9 5
Decrease in borrowings (16) (40)
------ ------
(7) (35)
------ ------
Net cash inflow/(outflow) 252 (235)
====== ======
Cash flows were invested as follows:
(Decrease)/increase in cash holdings (37) 112
Net portfolio investment
Payments to acquire investments 3,076 2,539
Proceeds from the sale of investments (2,787) (2,886)
------ ------
Net purchases/(sales) of investments 289 (347)
------ ------
Net investment of cash inflow/(outflow) 252 (235)
====== ======
The cash flows presented in this statement relate to shareholder and general
business transactions only.
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Page 15
Analysis of Group operating earnings before tax based on longer-term
investment return*
Restated
Balance on the technical account for long-term 1999 1998
business before tax excluding the amortisation #m #m
of acquired additional value of in-force
long-term business
United Kingdom
Conventional with-profit 90 102
Non-profit, unitised with-profit and unit-linked 414 367
------ ------
504 469
------ ------
Europe (excluding UK)
France 24 20
Ireland 43 32
Poland (14) -
Spain 8 7
Other European Union 5 1
------ ------
66 60
------ ------
International
Australia 22 15
Other 4 3
------ ------
26 18
------ ------
Total long-term business balance on the
technical account before tax 596 547
Net investment return on shareholders' assets -
long-term business 33 30
------ ------
Total long-term business 629 577
------ ------
Balance on the technical account for general
business excluding the change in the
equalisation provision**
United Kingdom
Motor 31 34
Household 23 2
Property and packages 22 30
Creditor 20 5
Other 9 4
------ ------
105 75
------ ------
Europe (excluding UK)
Ireland 4 4
Spain (4) 3
Other European Union 5 (8)
------ ------
5 (1)
------ ------
International
New Zealand 12 11
Other 4 3
------ ------
16 14
------ ------
Discontinued operations (UK) - 3
------ ------
Total general business balance on the technical
account 126 91
Net investment return on shareholders' assets -
general business:
- Continuing operations 69 69
- Discontinued operations (UK) - 1
------ ------
Total general business 195 161
------ ------
Profit from non-insurance operations 10 9
Holding companies (32) 7
Corporate costs (41) (38)
------ ------
Operating earnings before tax based on
longer-term investment return* 761 716
====== ======
Operating earnings before tax analysed between:
- Continuing operations 761 712
- Discontinued operations (UK) - 4
------ ------
Operating earnings before tax based on
longer-term investment return* 761 716
====== ======
* Excludes the change in the equalisation provision and stated before
integration costs, amortisation of acquired additional value of
in-force long-term business and amortisation of goodwill.
** The general business balance on the technical account comparatives
incorporate certain re-analyses as set out on page 20.
END OF PART B
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