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Upheaval could see CGNU turn from UK

One of the UK&#39s biggest insurers CGNU says the upheaval caused by depolarisation may lead it to divert shareholder capital outside the UK.

CGNU, parent company of Norwich Union, says the profitability in the UK may be “undermined” by the extent of regulatory upheaval currently taking place and may lead to resources being directed into continental Europe as a more promising market.

Speaking to Money Marketing, CGNU director and NU chief executive Philip Scott said the potential effects of depolarisation and the challenges on margins from stakeholder make the UK look increasingly problematic.

He says: “We have to identify where the best place is to put our capital. At the moment, the UK market is not the most attractive. Some of the changes, if handled inappropriately, will lead to a weakening of the UK market.”

CGNU plans to change its name to Aviva as part of international expansion plans. There will be no change to the Norwich Union brand in the UK. The company has cut its 2002 dividend to 23p from 38p to raise capital.

The group claims to be the biggest life insurer in the UK, with a market share of 11 per cent in UK life and pensions. Scott says CGNU is committed to stakeholder and NU has a 20 per cent share of the market but says the 1 per cent charge is too low and the Government needs to recognise that advice must be paid for.

He says: “There are a number of rule changes going on in the UK. Some of the proposed changes will support an open marketplace and professional advice.

“But there are risks in the legislative changes. They could lead to concerns for the overall profitability for IFAs and providers, which could be further undermined by the changes. This could lead to markets outside the UK being more attractive.”

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