Storms Expected to Pall Insurer’s Results

February 23, 2001

CGNU is expected to report next Tuesday pre-tax operating profit of between 1.2 and 1.4 billion pounds, compared to a pro forma 1.534 billion pounds ($2.22 billion) last time.

The group was created through the merger of CGU and Norwich Union almost a year ago, which triggered major restructuring, including disposals of non-core businesses.

The figures will be complicated by the upheaval, which includes a 1.4 billion pound loss on the sale of CGNU’s U.S. property and casualty business to White Mountains Insurance Group.

Last week, CGNU said the deal would involve an additional charge of $200 million. CGNU estimated in November that its net exposure to heavy flood damage in the UK last year would not exceed 200 million pounds because of reinsurance taken out. CGNU produced strong UK sales figures last year ahead of expectations despite a flat market. This could carry on into the current year.

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