fund management

Annual report and accounts 2000Operating review

22 CGNU plc

The merger catapulted CGNU into becomingthe second-largest UK-based fund managerand one of the top 10 in Europe, withworldwide assets under management of £220 billion. This position enables us to retainand recruit the highest-quality investmenttalent, makes it practical to undertake morespecialised research and gives CGNU greaterinfluence with the companies in which itinvests – all of which potentially contributes tobetter performance.

In building a world-class fund managementbusiness, CGNU aims to attract more third-party mandates, to increase its share of retail funds and to operate increasingly as atruly global fund manager. Third-party fundsincreased by 5% to £27 billion at the end of 2000. The operating profit was lower thanlast year, reflecting investment in NorwichUnion’s UK retail business.

UK

In the UK, the integration of the CGU andNorwich Union fund management businessesis progressing well and the combined operationhas been relaunched under the Morley brand.The institutional fund management businessfaced an inevitable slowdown in new mandatesas consulting actuaries waited to be convincedthat the merger would not disturb investmentperformance. Morley is gradually beingrestored to their “buy lists”and new funds arebeing won, most notably a £250 million bondmandate from a UK public authority.

The retail business (operating as NorwichUnion Investment Funds) is the UK’s leadingprovider of low-cost, Cat-standard Isas andcorporate bond Isas. Following the launch of anonline Isa in March, the business is already theseventh-ranking internet Isa provider in theUK. As part of a wider drive to promote the use of e-commerce, the business now enablesIFAs to facilitate the online purchase of Isas by clients.

During the year, Morley continued on itscourse to become a UK leader in sociallyresponsible investment when it recruited oneof the country’s top teams in this growing field.

Fund management operating 2000 1999profit before tax £m £m

UK 16 37France 9 5Netherlands 13 4Other Europe 2 2Australia 16 16Other international 5 2

Total 61 66

Fund management

15

4

3

2

14

3

2

1 – UK: £897m2 – Netherlands: £1,025m3 – Other Europe: £284m4 – Australia: £295m

1 – UK: £128bn2 – France: £30bn3 – Netherlands: £28bn4 – Other Europe: £14bn5 – International: £20bn

Assets under managementRetail fund management sales

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23 CGNU plc

Netherlands Delta Lloyd Nuts Ohra has one of the best investmentperformance records in theNetherlands. A particular successin 2000 was in mutual funds,where – mainly through Ohra –we recorded sales in excess of £1 billion which represents20% of the market.

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24 CGNU plc

France

It was also a good year for Victoire AssetManagement in France, particularly in the unit-linked market. More than half its fundsranked in the top quartile of the French index and 83% were in the top half, aperformance recognised by the award of bestfund management company for 2000 from La Tribune.

Netherlands

Delta Lloyd Nuts Ohra is one of the best-performing fund managers in theNetherlands. The year brought substantialgrowth in assets under management (up to £28 billion), with sales of mutual funds leaping381% to £1 billion. Further success wasachieved by the Delta Lloyd Investment Fund,which ranked first in the list of global mutualfunds in 2000. Ohra was voted the best assetmanager by the country’s investors and gaineda further award for performance from the Nyfer business school.

Other Europe

CGNU is transferring the Navigator concept toEurope as part of its internet-enabled offshorewealth management service, based in Dublin.The service is available to wealthy individualsin Ireland, the UK, Spain and Italy. Early resultsare encouraging and Navigator is likely to beoffered in other markets in Europe and Asia.

Australia

The retail investment fund business inAustralia scored successes with Navigator.Developed in Australia, Navigator assistscustomers in constructing tailored investmentportfolios. By offering a wide range of fundmanagers, Navigator is able to accommodatethe preferences of a wide variety of consumers.It offers easy entry to a range of investmentsbacked by simple-to-access financial data and the ability to switch within schemes.Navigator is one of the leading fundadministration service providers in Australia.Navigator ranks second in the market withsales of £824 million in 2000, up 36%, andfunds under administration of £2.4 billion.

1

2

1 – CGNU’s powerful new fund managementoperation in the UK was relaunched under theMorley brand on 1 November.

2 – Victoire Asset Management’s investmentperformance was recognised by a number ofawards, including the grand prix de la gestiond’actifs from the top financial magazine, L’AGEFI.

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fund management

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