RNS No 4082e
NORWICH UNION PLC
3 August 1999
PART A
NORWICH UNION PLC
Interim Results and New Business Figures for the six months to 30 June 1999
6 months to 6 months to
30.6.99 30.6.98 Change
#m #m %
Worldwide new business APE* 265 193 37
New business added value
(post cost of capital) 60 45*** 33
Gross premium income 3,612 2,655 36
Operating earnings
before tax** 380 361*** 5
Operating earnings per
share** 14.1p 13.3p*** 6
Interim dividend per share 4.65p 4.25p 9
- UK long-term savings new business up 40 per cent to #181 million APE
- All business units reporting improved results
- Funds under management increased by 4 per cent since 31.12.98 to #60.2
billion
- Shareholders' funds increased by 3 per cent since 31.12.98 to #5.9
billion
Richard Harvey, Norwich Union's Group Chief Executive, commented:
"We have continued to make very good progress during the first half of 1999.
Significant investment has been made in our businesses both in the UK and
internationally, and strong growth of 37 per cent in worldwide new business
has been achieved. More importantly, new business added value, the measure of
the expected profits from new business, has increased by 33 per cent. Despite
the investment for future profit, current operating earnings before tax have
increased a further 5 per cent to #380 million, to give a combination of very
sound overall business performance.
"In particular, we are delighted by our strong life and investment new
business sales, especially in the UK where we have achieved a 40 per cent
growth in sales over the first six months of 1999. This excellent result,
achieved while maintaining profit margins, has been underpinned by investment
in our distribution capability.
"We remain committed to growing our UK and international long-term savings
operations where we continue to see increases in earnings in the first half of
1999. In addition to organically growing our existing businesses, we have
bought a direct selling long-term savings and protection business in Spain, a
top-10 property investment management company in Australia, and have
established a leading pensions operation in Poland.
"Our UK general insurance business continues to prosper, having successfully
integrated London & Edinburgh. With improved critical mass in our personal
lines business we are continuing to build our profitable track record. Our
investment in leading-edge systems, outstanding claims management and a broad
distribution approach continues to see us through challenging market
conditions.
"There are short-term challenges to overcome in a fiercely competitive
business. In common with the rest of the industry, we must hold down our costs
and produce good returns in an environment of low inflation and low interest
rates. We are clearly focused on what needs to be achieved."
* Annual premium equivalent (APE) is an industry standard for calculating
life, pensions and investments new business levels. It is the total of new
regular premiums plus 10 per cent of single premiums.
** 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.
*** Denotes restated figure.
Dividends: Shareholders entitled to receive a dividend converted to Irish
punts will receive 5.49 Irish pence per share based on the exchange rate
prevailing on 2 August 1999. The payment date of the dividend will be 15
December 1999 and the record date will be 15 October 1999.
Media enquiries:
James Duffell Norwich Union 01603 680874
John Sunnucks Brunswick 0171 4045959
Analyst enquiries:
Rebecca Burrows Norwich Union 01603 680117
Nic Nicandrou Norwich Union 01603 683129
Philip Scott Norwich Union 01603 683936 (UK new business figures
enquiries)
Tom Fraser Norwich Union 01603 682122 (International new business
figures enquiries)
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Highlights
HIGHLIGHTS
Business growth
- Worldwide new business sales of long-term savings products (life,
pensions and investments) rose by 37 per cent to #265 million annual
premium equivalent.
- Worldwide life and pensions new business added value before cost of
capital increased to #70 million.
- UK life and pensions sales rose by 36 per cent to #169 million annual
premium equivalent.
- UK life and pensions new business added value before cost of capital is
up 35 per cent at #50 million.
- UK margins have been maintained at just under 30 per cent, sustaining
growth in volume and profitability.
- Sales through direct channels now account for over 13 per cent of UK
Long-Term Savings.
Group
- Worldwide pre-tax technical result* of our insurance operations is up 10
per cent to #358 million.
- Operating earnings** growth of 5 per cent to #380 million has been
suppressed by investment in strategic business initiatives, a lower
longer-term investment return outlook and new business strain.
UK Long-Term Savings
- The UK non-profit business pre-tax technical result grew to #205 million
(30 June 1998: #193 million) despite being held back by the expected
increase in new business strain and lower long-term investment returns.
- The embedded value of UK long-term business increased to #3.7 billion,
representing over 60 per cent of the Group's shareholders' funds.
Europe & International
- The European pre-tax life technical result rose to #29 million from #15
million, while new business sales rose by 11 per cent in local currency
terms to #51 million annual premium equivalent.
- Navigator, our market-leading master trust product in Australia, has seen
sales improve by 30 per cent to A$729 million, bringing total funds to
A$3.9 billion. The embedded value of Navigator and our other non-life
business in Australia rose to A$161 million. Value added by non-life new
funds is A$22 million, a margin of 1.7 per cent.
UK General Insurance
- UK general business operating earnings increased by 27 per cent to #80
million.
- UK general business expense ratio remains the lowest in the market, down
to 10.3 per cent (1998 year-end: 12.1 per cent).
- The London & Edinburgh integration has been completed and the acquisition
should be earnings enhancing by the end of 1999.
- The direct general insurance business now has 1.2 million customers and
is on track to make a profitable contribution in 1999.
* Excluding the change in the equalisation provision and stated before
amortisation of acquired additional value of in-force long-term business.
** Excluding the change in the equalisation provision and stated before
amortisation of acquired additional value of in-force long-term business and
amortisation of goodwill.
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Page 1
Operating review for the six months to 30 June 1999
Worldwide Group results
Operating earnings before tax *
Restated Full
6 months to 6 months to year
30.6.99 30.6.98 1998
#m #m #m
UK Long-Term Savings business 266 263 486
UK General Insurance business 80 63 145
Europe & International 49 34 91
life business
Europe & International 10 14 16
general business
Non-insurance business 6 3 9
Holding companies (13) 4 7
Corporate costs (18) (20) (38)
Operating earnings before tax * 380 361 716
* Operating earnings 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.
Norwich Union has continued to make very good progress during the first half
of 1999. Significant investment has been made in its businesses both in the UK
and internationally, and strong growth in worldwide new business has been
achieved with a rise of 37 per cent to #265 million annual premium equivalent
(30 June 1998: #193 million). More importantly, new business added value post
cost of capital, the measure of expected profits from new business, has
increased by 33 per cent to #60 million (restated 30 June 1998: #45 million).
Despite the investment for future profit, Group operating earnings before tax
have increased by a further 5 per cent to #380 million, to give a very sound
overall business performance. Operating earnings per share of 14.1 pence are 6
per cent up on the restated figure for 30 June 1998 of 13.3 pence.
Our UK Long-Term Savings business, with operating earnings before tax of #266
million (30 June 1998: #263 million), contributed 70 per cent of these
results. Our Europe & International insurance business achieved excellent
operating earnings growth of 23 per cent to #59 million, and increased its
contribution to the Group's earnings from 13 per cent to 16 per cent. The UK
General Insurance business continued to produce good returns with operating
earnings of #80 million, up 27 per cent (30 June 1998: #63 million).
During the past 12 months, the Group has used its own cash resources (over
#600 million) to finance the acquisitions of London & Edinburgh in the UK and
Portfolio Partners in Australia, to launch banking operations in the UK, to
build a personal pensions business in Poland and to transform its investment
management arm in the UK. As expected, in the six months to 30 June 1999,
these ventures did not produce sufficient earnings to compensate for the
returns lost on the cash invested in the operating businesses. However, they
are progressing in line with our plans.
Worldwide general insurance gross premiums written on continuing operations
increased by 63 per cent to #1,491 million. This result reflects growth in our
existing business and the inclusion of London & Edinburgh's business. The
latter was acquired in November 1998 and contributed gross premiums written of
#420 million in the six months to 30 June 1999. The integration of London &
Edinburgh is complete and we are confident that this acquisition will enhance
Norwich Union's earnings for the full year 1999.
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Page 2
On the achieved profit basis of reporting, which combines the embedded value
results of the Group's life operations with the modified statutory solvency
basis results of non-life businesses, operating profit before tax rose 6 per
cent to #334 million (restated 30 June 1998: #314 million). This included
embedded value operating profit from life businesses of #269 million, 5 per
cent higher than last year (restated 30 June 1998: #256 million).
The growth in embedded value operating profit before tax contributed to the
overall increase in the embedded value of the Group's long-term business to
#4.6 billion (31 December 1998: #4.4 billion). Embedded value is the main
component of the shareholders' funds, which grew to #5.9 billion (31 December
1998: #5.7 billion).
On the strength of these results, the board of directors has declared an
interim dividend of 4.65 pence net per share, a 9.4 per cent increase over the
1998 interim dividend of 4.25 pence.
UK Long-Term Savings
New business figures
Restated Full
6 months to 6 months to year
30.6.99 30.6.98 1998
#m #m #m
Annual premium equivalent (APE)
Life and pensions 169 124 276
Investments 12 5 7
181 129 283
New business added value (NBAV)
Life and pensions 50 37 82
Life and pensions 29.6% 29.8% 29.7%
margin (NBAV/APE)
Excellent half year figures for the UK saw long-term savings new business
growth of 40 per cent to #181 million annual premium equivalent (30 June 1998:
#129 million). Our UK core life and pensions sales rose by 36 per cent to #169
million, resulting in new business added value before cost of capital of #50
million (restated 30 June 1998: #37 million), an increase of 35 per cent.
Profit margins on new business were broadly maintained, a very positive
performance in our chosen markets in view of current competitive conditions.
Single premium business sales were especially pleasing, increasing by 46 per
cent to #998 million (30 June 1998: #683 million). In particular, single
premium bond sales of #393 million exceeded the total for the whole of 1998
(30 June 1998: #156 million, 31 December 1998: #392 million).
The first half of the year saw strong growth in sales of single premium
personal pensions, up by 13 per cent, and single premium group pensions, which
rose by 16 per cent. The future for this market is heavily influenced by plans
for stakeholder pensions. The key segment in this pensions market will be
corporate products, where Norwich Union is very well positioned given our
established capabilities in group personal pensions.
We continue to hold a leading position in the annuity market, where our
business also grew strongly to #333 million (30 June 1998: #319 million). In
response to the low interest rates affecting this market, we launched a
competitive with-profit annuity product in July.
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Page 3
Sales of maxi Isas (individual savings accounts) have started slowly across
the industry, owing to last-minute investment in Peps and consumer uncertainty
about the new product. However, we have a strong Isa proposition, with a wide
range of actively-managed Cat standard products to help people on to the
savings ladder. Our innovative and fairly-priced products have generated a
positive response and we are confident that levels of business will develop
further in the second half of the tax year.
Analysis of operating earnings before tax *
Restated Full
6 months to 6 months to year
30.6.99 30.6.98 1998
UK Long-Term Savings #m #m #m
Pre-tax technical result:
Non-profit business ** 205 193 367
With-profit business 52 62 102
Insurance result 257 255 469
Shareholders' net 9 8 17
investment return
266 263 486
* Operating earnings exclude the amortisation of acquired additional value of
in-force long-term business.
** Includes unitised with-profit and unit-linked business.
The UK market has been very buoyant, with low interest rates prompting
investors to move from cash deposits into other forms of investment. Our
strong sales proposition - innovative products, particularly savings vehicles,
brought to market quickly through a variety of distribution channels - enabled
us to benefit from these favourable conditions.
The pre-tax technical result from UK Long-Term Savings was #257 million (30
June 1998: #255 million). Non-profit business remained the most significant
constituent of the result, with an increased pre-tax technical result of #205
million. Our excellent growth in new business has adversely affected the non-
profit result through increased levels of new business strain. The growth in
the non-profit technical account has also been impacted by the lower long-term
rates of return earned on shareholders' capital invested in the business. The
lower levels of bonus rates announced at the start of the year contributed to
the reduction in the pre-tax technical result from conventional with-profit
business to #52 million (30 June 1998: #62 million).
The healthcare market is extremely tough but we are operating profitably,
extending our distribution channels, and delivering innovative, value-for-
money products. Developments this year include the Long-Term Personal Care
Bond, which can include life insurance equal to the original lump sum
invested. We also launched Fair+Square, a private medical insurance product
that enables people to choose between private and NHS treatment.
While we explore new distribution opportunities, and investment in our direct
sales channel continues, we remain firmly committed to the independent
financial adviser (IFA) channel. We have strengthened our team of IFA sales
consultants, and earned a gold award in the Financial Adviser pension provider
of the year awards, in which IFAs recognise excellence in investment, product
design, marketing and IFA support.
Electronic commerce is a fast-growing area that will fundamentally reshape how
financial services are delivered to IFAs and consumers. The maturing
capabilities of the Internet and the emergence of digital television (DTV)
will widen the appeal of e-commerce from a niche offering to a mass market. We
are currently advancing our plans to exploit the opportunities that this will
present, and are developing our Internet and DTV capabilities to support our
IFA partners and the growth of our direct business.
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Page 4
Investment Management
Worldwide funds under management benefited from continuing stock market growth
to rise to #60.2 billion (31 December 1998: #57.6 billion).
The move to London of our fund management teams is on course to be complete by
September, and the recruitment of additional key people continues to
strengthen the operation. We have also created a centralised dealing desk in
London.
In the UK, we have won mandates for an additional #330 million of funds under
management in the year to date, which is slightly ahead of our target. In
conjunction with property and finance specialists Mill Group, we launched the
Public Private Partnership Fund, the first UK institutional fund to invest in
the Government's private finance initiative projects. Our new UK Ethical Fund
has also attracted much favourable attention.
Our objective is to build on our achievements and deliver consistent and
repeatable performance that beats the relevant industry benchmarks and firmly
establishes Norwich Union as a top UK investment house.
Europe & International
Analysis of operating earnings before tax
Restated Full
6 months to 6 months to year
30.6.99 30.6.98 1998
#m #m #m
Life business pre-tax technical result:
Europe 29 15 60
International 13 10 18
42 25 78
General business technical result 8 10 13
50 35 91
Shareholders' net investment return 9 13 16
Insurance operations 59 48 107
We continue to focus on long-term savings business in those markets where we
are already strong, primarily in Europe. We will also identify and act upon
specific opportunities in individual markets where we can add shareholder
value. Our aim is to increase the profit contribution made by our overseas
operations to Norwich Union's overall results.
Our Europe & International life and pensions sales (excluding unit trusts)
rose by 16 per cent in local currency to #70 million annual premium
equivalent, and new business added value before cost of capital grew to #20
million (restated 30 June 1998: #19 million).
Our European operations delivered growth in long-term savings new business of
11 per cent in local currency terms to #51 million annual premium equivalent.
Particularly pleasing were the contributions from France and Ireland. Single
premium new business increased by 9 per cent (in local currency) to #139
million, while regular premium new business grew by 12 per cent (in local
currency) to #37 million.
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Page 5
Our continuing success in the Australian unit trust market and growing
pensions market contributed to an increase in our International long-term
savings new business of 71 per cent in local currency to #33 million annual
premium equivalent (30 June 1998: #19 million). Sales through the Navigator
"fund of funds" master trust rose to record levels at A$729 million, up 30 per
cent, bringing total funds to A$3.9 billion.
Our European life business achieved 93 per cent growth in its pre-tax
technical result of #29 million (restated 30 June 1998: #15 million), boosted
by strong earnings in France and Ireland. A very encouraging performance in
Australia contributed to growth in the International pre-tax technical result
to #13 million (30 June 1998: #10 million). These results confirmed the
excellent progress that continues to be made among our overseas businesses.
The strong new business performance in Ireland (up 33 per cent in local
currency to #16 million annual premium equivalent) was driven by the success
of with-profit bond sales, including the Celebration Bond product. The pre-tax
life technical result of #16 million (restated 30 June 1998: #9 million)
benefited from favourable mortality and lapse experience. A successful direct
marketing campaign helped boost sales of new business in France by 8 per cent
to #24 million annual premium equivalent, compared with 1998. The pre-tax life
technical result of #9 million (30 June 1998: #5 million) reflected the
containment of renewal expenses and favourable mortality experience. Against
the background of a difficult market for new business, we achieved a steady
performance in Spain, with a pre-tax life technical result of #3 million (30
June 1998: #2 million).
In July, we acquired British Life in Spain, which had total premium income of
#27 million in 1998. British Life has a strong direct sales force which will
complement the primarily broker-based distribution of our Spanish subsidiary,
Plus Ultra. This will significantly increase our ability to sell long-term
savings and protection products throughout Spain, while providing an
opportunity to improve efficiency.
The pensions and fund management industries in Australia have witnessed
dramatic expansion in recent years, and we expect this growth to continue. The
pre-tax technical result of our long-term business operations rose to #12
million (30 June 1998: #10 million). New life and pensions business in
Australia (excluding unit trusts) rose by 32 per cent in local currency to #16
million annual premium equivalent, including strong sales of single premium
savings bonds and pension products.
Bolstered by last year's acquisition of leading fund management company
Portfolio Partners, our unit trust sales increased by in excess of 200 per
cent and wholesale fund mandate sales were up 74 per cent to A$462 million.
Our Australian fund management operations, whose results are excluded from the
analysis of Europe & International operating earnings, contributed #7 million
to the Group's results in the first half of 1999 (30 June 1998: #2 million).
In July, we acquired 50.1 per cent of the share capital of First Australian
Property Group Holdings Pty Ltd (known as "Paladin"). The remaining share
capital will be bought in 2004. Paladin is one of the top 10 property fund
managers in Australia, with funds under management of more than A$1.8 billion
(about #0.8 billion). The addition of Paladin's property investment management
skills and reputation will further support our strategy of securing a leading
position in the Australian long-term savings and pensions market.
We launched a new personal pensions business in Poland in March, where Norwich
Union is one of only 20 companies, just two of them British, conducting
business in the newly-privatised pensions market. Excellent progress to date
is reflected in nearly 200,000 proposals received by 30 June 1999, giving us
an estimated 5 per cent share of the Polish pensions market. We expect to
include figures from Poland in our full year results for 1999. This
new operation demonstrates our ability to transfer knowledge across the Group
and apply our expertise in new markets. We are looking to build on the
impressive brand recognition already achieved and develop into other long-term
savings areas.
Our Europe & International general insurance operations, of which New Zealand
is the largest, produced an overall pre-tax technical result of #8 million (30
June 1998: #10 million). In Spain, a feature of the general insurance market
has been an increase in claims costs for motor insurers. This had an adverse
impact on our Spanish general business results, with a pre-tax technical loss
of #3 million (30 June 1998: #1 million profit).
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Page 6
UK General Insurance
Analysis of operating earnings before tax *
Restated Full
6 months to 6 months to year
30.6.99 30.6.98 1998
#m #m #m
Technical Results
- Motor 12 20 34
- Household 13 (1) 2
- Property and packages 13 10 30
- Creditor 9 3 5
- Other (including 4 2 7
discontinued operations)
Shareholders' net investment 29 29 67
return
Operating earnings before tax * 80 63 145
* Operating earnings exclude the change in the equalisation provision and
amortisation of goodwill.
Our UK General Insurance business continues to prosper having successfully
integrated London & Edinburgh. With improved critical mass in our personal
lines business we are continuing to build our profitable track record. Our
investment in leading-edge systems, outstanding claims management and a broad
distribution approach continues to see us through challenging market
conditions.
Our UK General Insurance business produced operating earnings before tax of
#80 million (30 June 1998: #63 million), a rise of 27 per cent. The technical
result, excluding the change in the claims equalisation provision, rose to #51
million, boosted by the relative absence of bad weather claims which in 1998
depressed the comparative technical result by #13 million.
Gross premiums written on continuing operations rose to #1,288 million (30
June 1998: #718 million). A ratio of expenses to premiums of 10.3 per cent (31
December 1998: 12.1 per cent) reflects the success of our commitment to
excellent operational efficiency and benefits arising from the improved
business mix achieved following the acquisition of London & Edinburgh.
The successful integration of London & Edinburgh was achieved by 1 June. The
benefits that we set out at the time of the acquisition last November are well
on track, with annual expense savings of #30 million due to be realised from
2000. The cost of integration will be in line with the #35 million previously
announced. The two operations have come together smoothly, with minimum
disruption to our customers. All the necessary processes are in place for new
business and renewal conversion, and we have successfully retained most of the
business previously written by London & Edinburgh.
The motor account represents the largest segment of our business. It was
therefore pleasing to see a growth in net premiums written from #380 million
to #544 million. The market is seeing the rate increases that we predicted.
Private car rates are 14 per cent higher than 12 months ago, and fleet rates
have increased by double that average figure over the same period. The effect
of these increases on profitability are largely overshadowed by increased
claims costs arising from personal injury cases and the Government's decision
to move the cost of treating road accident victims from the NHS to insurers.
These changes mean that further increases will be necessary, and we are
pricing accordingly. The combination of these factors, together with the
impact of including the loss-making London & Edinburgh book, has contributed
to a reduction in the motor account technical result to #12 million (30 June
1998: #20 million). We are taking action to address the changes imposed on the
market and to return the London & Edinburgh portfolio to profit. The effects
of our action will flow through in the second half of the year.
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Page 7
In the household market we believe prices must also increase. The technical
result was up at #13 million (30 June 1998: loss of #1 million), benefiting
from lower weather-related claims and a positive contribution from London &
Edinburgh, whose business gives our portfolio more balance. London & Edinburgh
has also increased our market share and positioning with intermediaries in the
property and packages business. As we reported at the end of last year,
margins are being squeezed but still represent a good return on premium. The
technical result for this account was #13 million (30 June 1998: #10 million).
Our creditor business produced a technical result of #9 million (30 June 1998:
#3 million). This growth area of the business has been substantially
strengthened by our acquisition of London & Edinburgh.
Norwich Union Direct, having ended 1998 with more than one million retained
policies, is on track to make a profitable contribution in 1999. Standards of
excellence in its call centres have been recognised by two further industry
awards this year.
Hill House Hammond, the high street insurance intermediary owned by Norwich
Union, continued to perform strongly. While not included in the analysis of UK
General Insurance operating earnings since it is classified as a non-insurance
operation, Hill House Hammond increased profits to #8 million (30 June 1998:
#5 million).
The development of market-leading distribution channels continues to help
Norwich Union's general insurance business achieve profitable growth. Forward-
thinking, flexible partnerships with leading brand names such as Ford,
Barclays, NatWest, Nationwide and Saga, and a growing direct and high street
business with more than two million customers, are underpinned by the strong
relationships we enjoy with national brokers and full-time insurance
intermediaries.
As a leading investor in electronic trading in the insurance sector, we
continue to create benefits from new technology. Our general insurance web
site for intermediaries went live in February, giving registered
intermediaries access to details of products, services and marketing advice.
The Internet is not a major part of our insurance business at the moment but
we have committed ourselves to developing a significant business in this
growing market.
Millennium
We have devoted considerable time and effort to ensure that our business will
not be affected by the millennium date change at the end of 1999. We are
confident that all systems critical to running Norwich Union's operations have
been year 2000 compliant since the end of 1998. Testing of our year 2000
contingency measures will be completed by the end of September 1999. A small
number of systems which will be obsolete and removed before 2000 have not been
made compliant, and we will continue to monitor the business partners upon
whom we rely until they complete their programmes. Our estimate of the overall
cost associated with this exercise has increased to #37 million (previously
#35 million) as a result of acquiring London & Edinburgh. Some #10 million has
been included in the interim results, bringing the total spend at 30 June 1999
to #31 million.
We are maintaining our position that, as an insurer, Norwich Union cannot
provide universal cover against loss or damage caused by the date change. It
is a foreseeable risk, and the provision of such cover would discriminate
against customers who have spent much time and money solving the problem for
themselves. In line with the rest of the industry, we have excluded liability
for claims arising from specific date-related problems, and have made this
known to our policyholders and intermediaries.
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Page 8
Directors
Two changes to the main board were announced during the first half of this
year.
Albert Mills, Chief Executive, UK General Insurance, is to retire on 30
September 1999. Albert joined Norwich Union in 1962 and is the longest-serving
executive director on the board, having been appointed in January 1990. Our
general insurance business has changed and prospered greatly during his time
as a director, and we wish him well in his retirement. Albert will be
succeeded by Patrick Snowball, currently Managing Director, UK General
Insurance (Intermediaries). Patrick, who will become a member of the board
on 1 October 1999, has worked within the Norwich Union Group since 1989, and
was appointed to his present post in 1996. He is currently responsible for
the very successful UK general insurance intermediaries operation, including
the award-winning Clubline claims process.
The second change involved the appointment of Guillermo de la Dehesa as a non-
executive director on 28 May 1999. Guillermo has been non-executive chairman
of the board of Norwich Union's Spanish subsidiary, Plus Ultra, since 1996. He
has considerable experience in both the public and private sectors in Spain,
and has extensive international knowledge, including vice-chairmanships of
Goldman Sachs Europe and the Centre for Economic Policy and Research in
London.
Outlook
Norwich Union's prospects for the remainder of 1999 and beyond are good. We
are operating in a general climate of welfare reform and legislative change
designed to place more responsibility on the individual for private financial
provision. We have strong, well-established operations in the UK, supported by
developing businesses in attractive markets in Europe and beyond, positioned
to meet these individual needs.
Our clear focus on shareholder value means that we concentrate on writing
business that will generate high-quality earnings into the future. We are in
good shape to take advantage of opportunities to develop and expand in the
three areas we have identified as our strategic priorities:
* growth of UK long-term savings business;
* building strong businesses in attractive long-term savings markets overseas;
* profitable development of UK general insurance business.
There are short-term challenges to be overcome in a fiercely competitive
business. In common with the rest of the industry, we must hold down our costs
and produce good returns in an environment of low inflation and low interest
rates. But we are clearly focused on what needs to be achieved and are firmly
committed to our three strategic priorities. We continue to make encouraging
progress in all three areas as we work towards our primary objective of
building shareholder value.
Richard Harvey, Group Chief Executive
George Paul, Chairman
END OF PART A
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