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Norwich lines itself up with the predators

Andrew Verity
Tuesday 08 September 1998 18:02 EDT
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NORWICH UNION, one of the UK's biggest insurers, sought to remove itself from the shopping lists of Britain's retail banks yesterday when it classed itself as "a predator, not a target".

There had been persistent market rumours of a takeover by a large retail bank wanting to expand sales of life insurance and pensions by buying an insurer. Speculation had focused on the Halifax and NatWest Bank as potential predators.

Richard Harvey, the chief executive, said Norwich Union's corporate strategy was to be "a consolidator"- rather than consolidated.

"If there was any doubt about it, I want to make the point that in terms of Norwich Union acquiring others, our team has been active in investigating opportunitiesboth here and abroad.

"We have not completed a deal of a meaningful size because we concluded we would not be prepared to pay the prices offered," he said. Recent corrections, however, had "taken some of the froth out of the market".

Norwich Union unveiled a bumper set of results yesterday for the first half of the year. Operating earnings before tax - the key measure for insurers - leapt 21 per cent to pounds 348m, at the top of analysts' expectations.

Much of the rise stemmed from a robust market for life and pensions. Sales jumped by 18 per cent last year after a slow first half when Norwich Union was completing its transition from mutual insurer to stock market listed company.

The general insurance arm was hit hard by poor weather in the first half, such as January storms and April floods costing pounds 13m.

However, Norwich Union was exposed to a far lesser extent than many of its insurance rivals, such as GRE or Royal & SunAlliance.

In March, Norwich Union sold its New Zealand life and savings operation for pounds 54m to Royal & Sun Alliance and bought St Paul's International, a small general insurer.

Norwich Union shares rose 6 per cent to close at 449.5p yesterday.

Shares in Prudential and Legal & General also rose by nearly 2 per cent each.

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