The Royal Bank of Scotland Venture plc Announce Financial Terms of Bancassurance Joint Ventures

17 July 2000

The Royal Bank of Scotland Group plc ("RBSG") and CGNU plc ("CGNU") have agreed the terms of their bancassurance partnerships, comprising Royal Scottish Assurance plc ("RSA") and National Westminster Life Assurance Limited ("NWLA").

As part of the arrangement, both RSA and NWLA will be restructured through joint venture agreements, with both RBSG and CGNU having a 50% share of each business. RBSG and CGNU will also seek to identify opportunities to develop their respective businesses through further commercial co-operation.

The parties have agreed that CGNU will pay £600m to RBSG for its 50% stakes, valuing the RBSG bancassurance business at £1.2bn, with a total embedded value currently estimated at £630m. It is anticipated, subject to regulatory approval, that the joint ventures will be operational during 2000.

Commenting on the announcement, Fred Goodwin, Group Chief Executive of RBSG said:

"Today’s announcement confirms the commitment we made to the market in November 1999 in respect of bancassurance. Since that time, we have enjoyed excellent working relationships with CGNU and can already see further possibilities for future co-operation. We believe that £600m represents a fair value for 50% of this business. We are confident that CGNU’s first class track record in design and delivery of quality products will greatly benefit our customers."

Bob Scott, Group Chief Executive of CGNU said:

"This joint venture will combine the market leading life capability of CGNU in the UK with RBSG’s enormous power in the retail market. Together we will set new standards in UK bancassurance."