Aviva 2001 Annual Report Download

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Leadership in financial services
Annual report + accounts 2001

Table of contents

  • Page 1
    Leadership in financial services Annual report + accounts 2001

  • Page 2
    ... the accounts Five year review Alternative method of reporting long-term business 99 CGNU Group of companies 100 Shareholder information 25 million customers w orldw ide 7th largest insurer w orldw ide Top 5 in Europe, No 1 in the UK £28 billion premium income and investment sales from continuing...

  • Page 3
    ... ide longterm savings new business sales 38 pence full year dividend £11.9 billion shareholders' funds £945 million operating profit before tax from general insurance continuing operations * Including life achieved operating profit before amortisation of goodwill and exceptional items. 01 CGNU...

  • Page 4
    ... Union Polska. In line with our strategy, we are growing our long-term savings business aggressively. It now accounts for approximately 70% of our annual premiums. Our general insurance operations are managed for balanced growth, sustainable profitability, and good returns which provide cash...

  • Page 5
    ... strategic focus on the long-term savings market" Operating profit before tax - continuing operations* £million Worldw ide new business sales £billion...100 95 90 85 * Including life achieved operating profit before amortisation of goodwill and exceptional items. Pehr G Gyllenhammar, Chairman 03...

  • Page 6
    ... insurance 4 - UK 17% 5 - Continental Europe 7% 6 - Rest of world 6% * With reference to premium income. Number one market positions: UK, Ireland T op-five market positions: Australia, Canada, France, Netherlands, New Zealand, Singapore 6 5 1 4 3 2 04 CGNU plc Annual report + accounts 2001

  • Page 7
    ... of stakeholder pensions in the UK, capturing over 20% of the total market - Strong growth in France and the Netherlands - Enhanced wealth management offering through norwichunion.com Performance in 2001 New business sales £13,479 million Net written premiums* £18,431 million Life achieved...

  • Page 8
    ... long-term savings new business sales. Our focus is on our three core businesses - long-term savings, fund management and general insurance. Some 70% of our premiums come from long-term savings, with the remaining 30% from general insurance (2000: 67%-33%). Ninety per cent of our total business...

  • Page 9
    ... general insurance policies to the Norwich Union brand and reduced 300 products to a new set of 70. Our achievement is a credit to the staff involved across the group, notably in the UK, Ireland, France, Spain and Italy. Operational cost savings have been achieved through conversion to a single core...

  • Page 10
    £15 billion record w orldw ide new business sales access to over 20 million customers via bancassurance 08 CGNU plc Annual report + accounts 2001 Operating review

  • Page 11
    ... bancassurance agreements with DBS in Singapore and Hong Kong have the added benefit of giving us a launching pad into the attractive long-term savings markets of South East Asia. The Chinese regulator agreed in September 2001 that we can begin the preparatory work for setting up a life and pensions...

  • Page 12
    ... UK stakeholder pensions and bonds £1,674 million life achieved operating profit Savings Savings products such as fixed income, equity-related or with-profit bonds are a major source of revenue for CGNU, particularly for the UK, Ireland, France, Spain and Italy. Total UK single premium bond sales...

  • Page 13
    Spain Bancassurance partnerships extend access to 8 million potential customers in Spain, where CGNU has the fourthlargest bank distribution network. Singapore New partnership with the DBS, one of the largest banks in South East Asia, gives CGNU a platform for future growth in this highly ...

  • Page 14
    Turkey A number of new developments have strengthened CGNU's position in the emerging markets of central Eastern Europe. Italy Strong new business growth arising from expanded bancassurance reach. 12 CGNU plc Annual report + accounts 2001 Operating review continued

  • Page 15
    ... and charges. Our customer service standards in the UK were put under significant pressure during 2001, partly because of strong sales arising from demand for stakeholder pension products. In Financial Adviser's annual IFA service awards in November 2001, Norwich Union received a three-star rating...

  • Page 16
    £209 billion w orldw ide assets under management +20% Navigator new business 14 CGNU plc Annual report + accounts 2001 Operating review continued

  • Page 17
    ...Tokyo, Singapore and Boston. Clients have access to the full resources of the Morley team, with more than 170 investment professionals, including fund managers, analysts, economists and strategists. As we develop our global operations, Morley will be established as the key platform for CGNU to build...

  • Page 18
    Morley's specialist SRI team, one of only a few in this field, undertook a number of initiatives during 2001, including the launch of a range of pooled pension funds. These funds focus on companies that make a direct link between sustainable development and long-term returns. Morley launched two new...

  • Page 19
    ... are among the leading fund managers in the Netherlands and are now expanding into Germany and Belgium. UK M orley Fund M anagement has a Socially Responsible Investment team, one of only a few in this field, making a direct link between sustainable development and long-term returns. 17 CGNU plc

  • Page 20
    ... risks, produces more stable and sustainable profits. CGNU is the leading general insurer in the UK and Ireland, and we have top-five positions in the Netherlands, Canada, Singapore, New Zealand and Australia (reinforced by the acquisition of Fortis Australia). Our strategy in these markets is to...

  • Page 21
    102% combined operating ratio 6 million customers supported by total incident management 19 CGNU plc

  • Page 22
    UK M ore than half of CGNU's general insurance business is written in the UK, where Norwich Union is the leading insurer and has a market share of 19% . Ireland Hibernian in Ireland gives CGNU the No 1 position in this market. 20 CGNU plc Annual report + accounts 2001 Operating review continued

  • Page 23
    ... our business partners. Driving innovation is a key part of our long-term strategy. With this in mind, the group is investing in new motor vehicle technology to help change the way motor insurance is bought by our customers in the future. Pay As Y ou Drive insurance uses a black box installed in the...

  • Page 24
    ...with quotes via the internet and other digital channels rising 60% to over one million during 2001. In France, our motor, health and property insurance business is sold through agents of Abeille assurances, brokers and a direct operation, Eurofil. In Ireland, Hibernian uses call centre technology to...

  • Page 25
    ... group is Morley Fund Management, which recognises that successful companies need to manage the environmental, social and ethical issues that affect their business. To maximise returns, Morley has adopted a socially responsible investment (SRI) strategy which uses shareholder engagement to ensure...

  • Page 26
    ... review are quoted at constant rates of exchange. 2001 overview Operating profit Year ended 31 December 2001 £m 2000 £m % Pre-tax operating profit, including life achieved profit, before amortisation of goodwill and exceptional items Life achieved profit Health Fund management General insurance...

  • Page 27
    ... million of single premium sales for the first time this year. The decline in equity-related business contributed to a sales slowdown in Ireland and the Netherlands, the latter seeing investment production fall from £1,025 million last year to £85 million in 2001. Long-term savings: new business...

  • Page 28
    ... Other Europe International Total 25.8 33.9 28.5 22.2 22.3 18.4 46.5 - 12.1 25.5 28.6 25.7 24.0 34.3 6.9 21.4 38.9 2.1 6.0 23.9 1. The ratio of long- term savings new business contribution to sales measured on an annual premium equivalent basis. 2. Excludes retail investment sales and is stated...

  • Page 29
    ... savings Year ended 31 December Life £m General UK Fund Business Management £m £m Corporate £m Total £m General insurance: combined operating ratio1 Year ended 31 December 2001 % 2000 % UK France Netherlands (including Belgium and Luxembourg) Other Europe Australia and New Zealand Canada...

  • Page 30
    ... management. All internal loans have been negotiated at a market rate and are appropriately serviced. The group's principal insurance operating subsidiaries have been assigned financial strength ratings of AA,"very strong security", from Standard & Poor's. Deployment of equity shareholders' funds...

  • Page 31
    ... 530p net asset value per ordinary share (based on equity shareholders' funds, adding back the equalisation provision) Borrowings At 31 December 2001 £m 2000 £m External debt Internal debt Subordinated debt Total 2,651 3,284 5,935 1,157 7,092 2,581 4,120 6,701 - 6,701 The ratio of the group...

  • Page 32
    ... Richard Harvey From Left M ike Biggs Philip T wyman T ony Wyand Patrick Snowball Philip Scott From Left Wim Dik George Paul Derek Stevens Sir M ichael Partridge From Left André Villeneuve Elizabeth Vallance Guillermo de la Dehesa 30 CGNU plc Annual report + accounts 2001 Board of Directors

  • Page 33
    ...Share Company Limited and of Swedish Ships Mortgage Bank and a member of the Supervisory Board of Lagardère SCA. Chairman of the Nomination Committee. George Paul DL (62) Deputy Chairman and non-executive director Appointed to the Board in May 2000 as Deputy Chairman. Joined the Norwich Union Board...

  • Page 34
    ... Group balance sheet 54 Consolidated cash flow statement 55 Company balance sheet 56 Notes to the accounts 91 Five year review 92 Alternative method of reporting long-term business 99 CGNU Group of companies 100 Shareholder information 32 CGNU plc Annual report + accounts 2001 Financial statements

  • Page 35
    ... 26 February 2002, have been reported to the Company. They relate to shares acquired through market purchases and the reinvestment of dividends in Personal Equity Plans and/ or Individual Savings Accounts. Number of shares Share capital Details of the share capital and shares under option as at 31...

  • Page 36
    ...' approval for such expenditure and, therefore, at the forthcoming Annual General Meeting the Board will be seeking Richard Whitaker Group Company Secretary 26 February 2002 Registered Office: St. Helen's 1 Undershaft, London EC3P 3DQ Registered in England No. 2468686 34 CGNU plc Annual report...

  • Page 37
    ... the items specifically reserved for decision by the Board, including the approval of the Group's strategy and business plans, acquisitions and disposals outside delegated limits, significant financial decisions and approval of key business policies. The said terms of reference contain a procedure...

  • Page 38
    ... least 20 business days before the meeting, to ensure that shareholders have sufficient time in which to consider the items of business. Details of the proxy voting by shareholders are available on request and on the Company's website. Both the Company's Annual report and Annual review are designed...

  • Page 39
    ... defined benefit pension entitlement and certain benefits, including a company car allowance and private medical insurance. The Company believes that a proportion of a senior executive's total remuneration should be "at risk" and attained through incentive plans which link rewards directly with...

  • Page 40
    ... in the Company's shares. lump sum death- in- service benefit of four times the member's basic salary at the date of death and a spouse's pension equal to two- thirds of a member's actual and prospective pension. Post- retirement pensions are reviewed annually and increases are guaranteed at a rate...

  • Page 41
    ..."Bonus"refers to amounts paid in 2002, but relating to 2001, under the Annual Bonus Plan (including amounts deferred under the Deferred Bonus Plan) and the value of shares granted in 2001 under the Inland Revenue- approved profit sharing scheme. (3) "Benefits"relate to the provision of a company car...

  • Page 42
    ... for ordinary shares of the Company or hold or held awards over shares in the Company, pursuant to the Company's share- based incentive plans, are set out below. (i) Share options At 1 January 2001 Number At 31 December 2001 Number Weighted average price p M ike Biggs - Savings related options...

  • Page 43
    ... Deferred Bonus Plan was approved by shareholders at last year's Annual General Meeting and replaced the CGU Deferred Bonus Plan referred to in note 3 above. The awards disclosed include those made in lieu of some or all of the cash bonus earned and deferred under the Company's Annual Bonus Plan in...

  • Page 44
    ... has agreed to award a cash bonus to these directors based on the number of shares (ranging from 5,584 to 11,170) and the Company's share price at the end of February 2002. This plan will now close. (8) Cost of the Plans. During the year, awards over a total of 1.4 million shares were granted to...

  • Page 45
    ..., Group Chief Executive's review, Operating review, Financial review, Directors' report, Corporate governance Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of...

  • Page 46
    ...technical account. Profits and losses arising on investment transactions with the long- term funds are included in realised investment gains. B - Future United Kingdom financial reporting developments In November and December 2000, the Accounting Standards Board issued three new Financial Reporting...

  • Page 47
    ... of purchased in- force long- term business is reviewed annually for any diminution in value and any reductions are charged to the long- term business technical account. M - Derivative instruments The Group uses derivative instruments, including forward foreign exchange contracts, interest rate...

  • Page 48
    ... required, in the accounts of individual insurance companies in the United Kingdom and in a limited number of countries overseas. The provision is required by law even though no actual liability exists at the balance sheet date. Q - Long-term business provision and technical provision for linked...

  • Page 49
    ... value of in- force long- term business (included within other technical charges) (22a) Amortisation of goodwill on associated undertakings Integration costs (9b) 1,203 (64) (13) - 1,126 1,190 (29) - (108) 1,053 Profit from long-term business operations before tax The accounting policies...

  • Page 50
    ...£m Total 2000 £m Operating profit General insurance - continuing operations Health - continuing operations General insurance - discontinued operations (2 & 3a) Unwinding of discount on business no longer written (37c) (Loss)/ profit before exceptional items Financial Services Compensation Scheme...

  • Page 51
    ...the long- term business technical account (G & 7b) Investment expenses and charges (7a) Allocated investment return transferred to the general business technical account (G & 7b) Other income/ (charges), including value adjustments Profit from fund management (3a) Loss on wealth management Loss from...

  • Page 52
    ... statutory life profit (3a) Health (3a) Fund management (3a) General insurance (3a) Other operations and associated undertakings Corporate costs (4) Unallocated interest charges (7a) Wealth management Total continuing operations Discontinued operations Amortisation of goodwill - long- term business...

  • Page 53
    ... reported - CGU plc - Norwich Union plc Merger adjustments arising from alignment of accounting policies 9,567 6,039 67 21,640 (962) (1,410) 133 - 5 19,406 Shareholders' funds at 1 January (2000 restated) Total recognised gains and losses arising in the year Dividends Increase in share capital...

  • Page 54
    ... (348) 126,430 6,605 147 143,000 27,255 Assets held to cover linked liabilities (23) Reinsurers' share of technical provisions Provision for unearned premiums (C) Long- term business provision (Q) Claims outstanding (D) Technical provision for linked liabilities (Q) Debtors Debtors arising out of...

  • Page 55
    ...(40j) Total capital and reserves: Equity Non- equity Subordinated debt Subordinated notes (S & 34) Total capital, reserves and subordinated debt Other liabilities Fund for future appropriations (T) Technical provisions Provision for unearned premiums (C) Long- term business provision (Q & 36) Claims...

  • Page 56
    ...and merger transaction costs paid Returns on investments and servicing of finance Interest paid on borrowings Interest paid on subordinated debt Preference dividends paid Dividends paid to minorities Net cash outflow from servicing of finance Tax Corporation tax paid Capital expenditure Purchases of...

  • Page 57
    ...535) (25) 475 14,130 (497) - 13,633 Capital and reserves Ordinary share capital (30) Preference share capital (31) Called up share capital Share premium account (30c) Revaluation reserve (33) Merger reserve (33) Profit and loss account: (33) Distributable Non- distributable 564 200 764 1,083 3,199...

  • Page 58
    ... Short- term fluctuation in investment return Loss on ordinary activities before tax Tax on loss on ordinary activities Loss for the financial year Retranslation to closing rate Retained loss * Unallocated interest charges are eliminated on consolidation. 56 CGNU plc Annual report + accounts 2001

  • Page 59
    ... (20) 8 9 53 70 6 12 50 68 (iii) Operating profit in respect of fund management before exceptional items Operating result 2001 £m 2000 £m United Kingdom Europe (excluding UK) France Netherlands Other Europe International Australia and New Zealand Other International (4) 12 8 2 7 4 29 16 9 13...

  • Page 60
    ... (loss)/profit in respect of general insurance business excluding health, before exceptional items Underwriting result 2001 £m 2000 £m 2001 £m Operating result 2000 £m United Kingdom Europe (excluding UK) France Ireland Netherlands Other Europe International Australia and New Zealand Canada...

  • Page 61
    ... of life and savings business premiums written before reinsurance is: New business - single premiums 2001 £m 2000 £m New business - regular premiums 2001 £m 2000 £m 2001 £m Total 2000 £m Life and pensions: United Kingdom - Group companies - associates* Europe (excluding UK) France Ireland...

  • Page 62
    ... after reinsurance 2001 £m 2000 £m United Kingdom Europe (excluding UK) France Ireland Netherlands Other Europe International Australia and New Zealand Canada Other International Total general insurance business premiums (excluding health) 5,256 793 525 408 591 665 1,013 306 9,557 5,274 713...

  • Page 63
    ... UK) France Netherlands Total health premiums 242 100 500 842 204 92 391 687 242 100 499 841 204 92 391 687 (v) Discontinued operations premium income Premiums before reinsurance 2001 £m 2000 £m Premiums after reinsurance 2001 £m 2000 £m United States London Market Total discontinued...

  • Page 64
    ... calculation of the longer- term investment return are: Longer term rates of return Equities 2001 % 2000 % Longer term rates of return Properties 2001 % 2000 % United Kingdom France Ireland Netherlands Australia and New Zealand Canada United States 8.1 7.5 8.7 8.4 10.0 9.3 9.3 8.1 7.5 8.7 8.4 10...

  • Page 65
    ...- technical account 2001 £m 2000 £m 2001 £m Total 2000 £m Merger integration costs: Charged to administrative expenses Charged to profit from fund management Charged to corporate costs Less: Net transfer to fund for future appropriations Integration incentive plans: Charged to corporate costs...

  • Page 66
    ... non- audit fees included consultancy work related to development of the UK wealth management service, and work relating to merger activity and the integration of Norwich Union plc and CGU plc, the majority of which was subject to competitive tender. 64 CGNU plc Annual report + accounts 2001 Notes...

  • Page 67
    ...loss) on ordinary act ivit ies Tax charged in the non- technical account comprises: 2001 £m 2000 £m UK corporation tax Advance corporation tax written back Overseas tax Associated undertakings Deferred tax Prior year adjustments Tax attributable to balance on long- term business technical account...

  • Page 68
    ... additional value of in- force long- term business Financial Services Compensation Scheme levy Integration costs Short- term fluctuation in investment returns Change in the equalisation provision Net profit/ (loss) arising on the disposal of subsidiary undertakings Loss on withdrawal from London...

  • Page 69
    ...bancassurance agreement with DBS Group Holdings Limited ("DBS"), the number one bank in Singapore and one of the largest in South East Asia, and acquired 100% of the issued equity share capital of The Insurance Corporation of Singapore ("ICS"), DBS's life and general insurance subsidiary, for a cash...

  • Page 70
    ... Total positive goodwill arising in the year was £496 million (note 17). (c) Disposals The net profit/ (loss) on the disposal of subsidiary undertakings comprises: 2001 £m 2000 £m Long- term savings businesses: Poland Canada (see (i) below) General insurance businesses: Germany South Africa New...

  • Page 71
    ... rate movements £m Reported in profit and loss account 2000 £m 2001 £m Total loss on disposal Total £m Proceeds, net of transaction costs Net assets to which proceeds apply, including capital injection Goodwill write back Pre- tax (loss)/ profit on sale Tax attributed to loss on sale Loss...

  • Page 72
    ... members of staff reporting to the Head of Property of Morley Fund Management Limited, who is a Fellow of The Royal Institution of Chartered Surveyors, or by local qualified staff of the Group in overseas operations. All properties are valued at market value. 70 CGNU plc Annual report + accounts...

  • Page 73
    ... Underwriting Managers Limited Norwich Winterthur Holdings Limited RBS Life Investments Limited Société Foncière Lyonnaise The British Aviation Insurance Company Limited (31 December 2000) Ordinary £1 Ordinary £1 Ordinary £1 Ordinary FF 50 Ordinary £1 shares shares shares shares shares 50...

  • Page 74
    ...Total 2000 £m Shares and other variable yield securities and units in unit trusts Debt securities and other fixed income securities: At current value At amortised cost Participation in investment pools Loans secured by mortgages: Own mortgages Securitised mortgages (21) Less: Non- recourse funding...

  • Page 75
    ... accounts. The economic benefits of ownership of an additional holding of 16.6% (2000: 12.1%) belong to the Delta Lloyd Pension Fund. (e) Included within other financial investments are shareholdings held on a long- term basis in the issued share capital of Société Générale, a banking company...

  • Page 76
    .... The purchase of the mortgages was funded by the issue of fixed and floating rate notes by ERF1. The ultimate effective holding company of ERF1 is Equity Release Funding Holdings Limited, whose shares are held on trust. NUER does not own, directly or indirectly, any of the share capital of ERF1...

  • Page 77
    ... under the heading "Other technical charges"in the long- term business technical account on page 47. This is grossed up for attributable tax in the reconciliations on pages 47 and 50, and in note 3b on page 58. Details of the assumptions and methodology supporting the additional value of in- force...

  • Page 78
    ...- 153,735 2,259,485 2,413,220 6 - - 6 4 10 These shares are owned by an employee share trust to satisfy awards under Integration Incentive Plans, Deferred Bonus Plans, Executive Share Option Plans and the CGNU Long Term Incentive Plan. A charge to profit has been made in respect of the exercise of...

  • Page 79
    ...: 2001 £m 2000 £m Deposits by banks Bank customer accounts Stockbroking clients and counterparties Bank overdrafts Other banking and stockbroking liabilities 229 2,270 - 41 772 3,312 124 1,269 28 22 456 1,899 30 - Ordinary share capital (a) The authorised share capital of the Company at 31...

  • Page 80
    ... each in the Company were outstanding as follows: CGNU Savings Related Share Option Scheme Option price p Number of shares Normally exercisable Option price p Number of shares Normally exercisable 437.74 484.66 478.26 580.27 Norwich Union Savings Related Share Option Scheme Option price p 141,637...

  • Page 81
    ...'s Savings Related Share Option Schemes. Alternatively, new shares may be issued by the Company to meet such obligations. (c) During 2001, a total of 3,825,929 ordinary shares of 25 pence each were allotted and issued by the Company as follows: Number of shares Share capital £m Share premium...

  • Page 82
    ... reserves Movements in the Company's reserves comprise: Revaluation reserve £m Merger reserve £m Profit and loss account £m Total £m Profit for the year attributable to equity shareholders, including dividends paid or proposed by subsidiary undertakings Dividends Retained loss for the year...

  • Page 83
    ... written by Norwich Union Life & Pensions are derived from management fees and policy charges, and emerge in the non- profit fund. (ii) In France, where the majority of policyholders' benefits are determined by investment performance, subject to certain guarantees, and shareholders' profits are...

  • Page 84
    ... on the general business technical account and the profit on ordinary activities before tax. The closing provision in 2000 was reduced by £23 million, representing the equalisation provision of a subsidiary company sold during that year. 82 CGNU plc Annual report + accounts 2001 Notes to the...

  • Page 85
    ... interest charge for the year on the above loans was: 1 6 44 - 51 2 The 9.125% US$100 million subordinated debentures 2026 were issued by the Canadian General Insurance Group Limited in 1996, and redeemed at the option of the company on 31 March 2001. The 9.5% and the 8.625% guaranteed bonds were...

  • Page 86
    ...31 December 2001, the value of a Société Générale share was a62.85. The 10.75% guaranteed bonds were issued at a discount of £0.8 million and this amount, together with the issue expenses, is being amortised over the full term of the bonds. The 2.5% subordinated perpetual loan notes were issued...

  • Page 87
    ... on the London Stock Exchange. Their fair value at 31 December 2001 was £331 million (2000: £297 million), based on their quoted market price. 41 - Other creditors including tax and social security 2001 £m 2000 £m Banking and stockbroking liabilities (29b) Proposed final ordinary dividend (14...

  • Page 88
    ... of the Norwich Union Pension Plan was valued as at an effective date of 1 October 2000 using the Attained Age Method, as this section was generally closed to new employees. The scheme had an overall asset value of £1,447 million and a funding level of 122%. The cost of future service benefits in...

  • Page 89
    ... defined contribution pensions. UK Netherlands Canada Ireland Date of most recent actuarial valuation The main financial assumptions used to calculate scheme liabilities under FRS17 are: Inflation rate General salary increases Pension increases Deferred pension increases Discount rate Various 31...

  • Page 90
    ... net cash inflow from operating activities is: 2001 £m 2000 £m Profit/ (loss) on ordinary activities before tax Add back: Integration costs Financial Services Compensation Scheme levy Merger transaction costs Profit/ (loss) on ordinary activities before tax, excluding exceptional items and merger...

  • Page 91
    ... Net cash inflow Foreign exchange rate movements Loans in acquired companies Changes in financing Balance at 1 January Balance at 31 December Share capital is represented by: Ordinary share capital Preference share capital Share premium account Merger reserve in respect of share capital 29...

  • Page 92
    ... uncertainty. The Group is continuing with a review of those past sales of personal pension policies which involved transfers, opt outs and non- joiners from occupational schemes, as required by the Personal Investment Authority and the Financial Services Authority. The regulators have extended the...

  • Page 93
    ... sales and health premiums, including share of associates General insurance Total continuing operations Consolidated profit and loss account Life assurance (achieved profit basis) Health Fund management and non- insurance operations General insurance Corporate costs and unallocated interest charges...

  • Page 94
    ... Services Compensation Scheme levy Integration costs Operating profit before tax Variation from longer- term investment return Effect of economic assumption changes Change in the equalisation provision Net profit/ (loss) arising on the sale of subsidiary undertakings Loss on withdrawal from London...

  • Page 95
    ... the Poland pensions operation. * * Profits from other life and savings activities include the UK service company, which is deemed to act as a separate business segment to the long- term business operations, and have been calculated on a statutory basis. * * * Exceptional items comprise integration...

  • Page 96
    ... United Kingdom * Europe (excluding UK) France Ireland Italy Netherlands (including Belgium and Luxembourg) Poland - life - pensions* Spain Other International Total life achieved operating profit before tax and exceptional items* * * Excludes other life and savings activities. 850 227 79 55 221...

  • Page 97
    ... Insurance Corporation of Singapore (£25 million). Embedded value from businesses acquired in 2000 comprises Hibernian Group in Ireland (£57 million), Aseval in Spain (£94 million), and the Group's share of the associated partnership in RBS Life Investments Limited (£343 million). Embedded value...

  • Page 98
    ... life of an insurance policy. The total profit recognised over the lifetime of a policy is the same as under the modified statutory basis of reporting, but the timing of recognition is different. Distributable profits from long- term businesses arise when they are released to shareholders following...

  • Page 99
    ... of in- force business. A realistic estimate of future fund management expenses that will be charged to long- term businesses by Group companies not included in the long- term business covered by the achieved profits method has been included within the value of in- force business. • It has been...

  • Page 100
    ... December 2001 has been properly prepared in accordance with the achieved profits basis, using the methodology and assumptions set out on pages 96 to 98. Ernst & Young LLP London 26 February 2002 98 CGNU plc Annual report + accounts 2001 Alternative method of reporting long-term business continued

  • Page 101
    ... plc London & Edinburgh Insurance Group Limited Morley Fund Management Limited Morley Pooled Pensions Limited Morley Properties Limited Northern Assurance Company Limited, The Norwich Union Annuity Limited Norwich Union Healthcare Limited Norwich Union Insurance Limited Norwich Union Investment...

  • Page 102
    ...be used to purchase CGNU's shares, on or after the dividend payment date, in accordance with the terms of the Plan. eholders who have not already joined the Plan and wish to do so, should contact the Company's Registrar, at the address der to obtain full details and a mandate form. Completed mandate...

  • Page 103
    .... General shareholding administration queries and CGNU share account queries Corporate and single company Peps Lloyds TSB Registrars The Causeway Worthing West Sussex BN99 6DA Tay House 300 Bath Street Glasgow G2 4LH The Causeway Worthing West Sussex BN99 6DA St Helen's 1 Undershaft London EC3P 3DQ...

  • Page 104
    CGNU plc St Helen's, 1 Undershaft London EC3P 3DQ T elephone +44 (0)20 7283 2000 www.cgnu-group.com Registered in England Number 2468686