Life and pensions boost profits 35% at Norwich Union

Norwich Union Ireland has announced profits of £55.8 million (€70.9 million) for 1999, a 35 per cent increase on the previous year, with all of the growth coming from its life and pensions business.

Profits in this division, excluding the returns on shareholder funds, were up by 39 per cent to £51.5 million, whereas profits in the general insurance division remained steady at £4.3 million.

"The results reflect another outstanding year, particularly in our primary life and pensions market, where we have more than trebled our profits in Ireland in the two years since the flotation of the group in 1997," said chief executive Mr Vincent Sheridan.

The 86,000 Irish shareholders in Norwich Union, which announced plans to merge with rival CGU just 10 days ago, will benefit from an increased dividend of 11.85p per share, up 22 per cent on last year's payout of 9.73p.

In the UK, the dividend is up 9 per cent but Irish shareholders are benefitting from the recent strength of sterling against the pound.

The dividend, which has a record date of April 14th, will be paid on June 14th, 2000.

In its life and pensions division, new business grew by 53 per cent while overall gross premium income was up by 57 per cent to £339.6 million.

The embedded value of the life and pensions business increased by 7 per cent to £454.4 million. Embedded value, the measure used by analysts to compare insurance businesses, measures the net worth of the business in net assets as well as the value of future earnings from products already in the company's portfolio.

On the general insurance, or home and motor side, the company reported an 11 per cent increase in net written premiums to £83.8 million. Mr Sheridan said the company had "done well" to maintain profit levels in the competitive general insurance marketplace, which still had to take account of the impact of reduced investment yields on the bottom line.

At the end of last year, Norwich Union had funds of £3 billion under management in the Republic. During the year, the company also expanded its investment activities to provide investment services to third parties and has secured 12 pension fund investment mandates to date.

The company's UK-based parent, Norwich Union plc, reported a 7 per cent rise in annual profit and said margins on life and pensions business had been maintained.