Mike Biggs Group Finance Director. Catching the wave of bancassurance

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1 Mike Biggs Group Finance Director Catching the wave of bancassurance European financials and the search for growth Goldman Sachs Banking and Insurance Conference Venice June 2002

2 Disclaimer This presentation may contain certain forward-looking statements with respect to certain of CGNU s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond CGNU s control including among other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest t rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which CGNU and its affiliates operate. As a result, CGNU s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in CGNU s forward-looking statements. CGNU s undertakes no obligation to update the forward looking statements contained in this presentation or any other forward looking statements we may make.

3 Overview 7th largest worldwide insurer UK s largest insurer Strong platform in continental Europe Over 200 billion in assets under management Premium sales 28 bn * Cont. Europe Life 30% UK Life 36% International Life 4% UK General 17% Cont. Europe General 7% International General 6% Leveraging multi-distribution capability * Ongoing businesses. Life includes retail investment sales and health premiums

4 Strategy Grow long-term savings aggressively and profitably Build a world-class fund management business Focused approach to general insurance business Build top 5 positions in each market Withdraw from lines of business or markets which do not offer the potential for market-leading positions or superior returns

5 CGNU achieving strong growth in long-term new business CAGR: 24% per annum billion 15 Mutual funds 10 Life & pensions

6 Attractive returns on life new business (2001) Business Unit Internal Rate of Return (net of tax) UK 17% France 16% Netherlands 10% Spain 24% Italy 16% Ireland 27% Poland 22% Other 11% All Business 16%

7 Best general insurance results from European insurers 2001 Reported COR Excl WTC CGNU 102% 102% Allianz 109% 104% AXA 113% 112% Generali 108% 108% ING 104% 104% RSA 113% 110% Zurich 111% 109% Source: Company reports

8 Different countries...different channels UK Total market - Life France Germany Italy Spain Advice/Broker Bancassurance Salesforce Direct & Other Source: Datamonitor

9 CGNU distribution by country UK France Germany Italy Spain Poland Advice/Broker Bancassurance Salesforce Direct & Other

10 Growth in bancassurance across markets % 80 Estimated Bancassurance Market Share in Life Insurance France Italy Spain Germany UK Netherlands Source: Industry Associations/Goldman Sachs/Schroders Schroders

11 CGNU - capturing the wave of bancassurance UK Spain 2000 Italy Asia /2002 Access to over 20m customers

12 CGNU: bancassurance sales momentum m 1, RBSG Spain Bancassurance sales (14% of total sales) Italy Singapore 0 3m m m m 2001

13 CGNU: Attractions of bancassurance Access to large customer base Opportunity to penetrate markets rapidly Diversification of channel risk High quality customer relationships Reduce unit costs by adding volume with fixed overheads Opportunities beyond life & pensions

14 Why is CGNU attractive to banks? Understands insurance market Provides product design and admin expertise Understands bank distribution models and culture Consumer attitudes Competitive positioning Regulation Specialisation Scale/low cost Training & compliance Third party admin experience Relationship management Leverages knowledge Banks expand their revenue.with capital efficiency

15 Aligning economic interests Joint Venture Insurer -Products 50% equity Fee Bank -Sales -Admin -Asset mngt Fee 50% equity -Marketing -CRM Joint Board aims to maximise value of JV

16 Royal Bank of Scotland Group JV in the UK Significant opportunity 10 million UK customers 25% of small / medium enterprise market Economic interests aligned Excellent relationships at all levels Branch incentives aligned to lead generation Bank branded products strength through depolarisation reduces IFA channel conflict for CGNU 85% growth in quarter

17 CGNU: Spanish bancassurance One product / admin platform JV life cos ASEVAL Bank BANCAJA Customers 2.4m Controlling 50% stakes UNICORP VIDA BIA GALICIA UNICAJA CAIXA GALICIA 2.0m 2.3m CAJA ESPAÑA VIDA CAJA ESPAÑA 1.3m 8.0m

18 Efficiency the key to insurers margin CGNU s Spanish bancassurance platform (Aseval( Aseval): Acquisition costs (as % of premiums) 1.0% 0.7% Single 10.0% 7.0% Regular Bancassurance sector Maintenance costs (Ptas per in-force policy) Aseval 1, , Single Regular Source: Sector figures from Watson Wyatt and Aseval

19 Valuation approach to Spanish JVs Initial investment Contingent element for new business added value to reward strong performance m Value creation Embedded Value of business Acquisition price - x% of plan On plan + y% of plan Performance v plan

20 Partnerships with DBS in Asia Our partner Largest bank in SE Asia CGNU acquired 100% of life subsidiaries Singapore No.1 bank Attractive long-term savings market 4 million customers (> 90% of population) New transparency to favour low cost providers Hong Kong 4th largest bank Bancassurance estimated c. 25% of the life market 1 million customers First significant steps into long-term savings in South East Asia

21 Summary CGNU has a multi-channel skill base Capturing growth in different customer channels Bancassurance deals structured to give our required internal rates of return Catching the current wave of bancassurance growth