CGU Defends Its Stake in Societe Generale and Reports 5% Rise in Profits

Strategic Insights -

CGU, the recently-merged insurance group, has defended its decision to increase its stake in Societe Generale, despite the French authorities freezing the new shareholding and taking the matter to court on August 24. The company's chief executive, Bob Scott, stated that CGU acted in accordance with the legal advice it received and believes its actions were perfectly correct. This announcement came as CGU reported a 5% rise in profits and achieved more than half its turnover from life and savings products, a significant milestone for the company.

Key Takeaways:

  • CGU increased its stake in Societe Generale from 3.1% to 6.9% in a private deal, despite the French authorities freezing the new shareholding and taking the matter to court.
  • The company's chief executive, Bob Scott, stated that CGU acted in accordance with the legal advice it received and believes its actions were perfectly correct.
  • CGU reported a 5% rise in profits and achieved more than half its turnover from life and savings products, a significant milestone for the company.
  • The company's operating profits before tax and merger integration costs rose to £420m, with CGU expecting to squeeze out £55m more cost savings from the merger between Commercial Union and General Accident than first expected.
  • CGU now expects to achieve cost savings of £325m from the middle of next year.
  • The company's dividend was raised by 7.5% to 14.25p.
  • Bob Scott, chief executive of CGU, anticipated further mergers in the life insurance sector in the UK and stated that CGU would participate if an opportunity to add skills, products, or distribution arose.

Statistics:

  • £484m: the amount CGU invested in the takeover bid for Societe Generale.
  • 6.9%: the percentage stake CGU owns in Societe Generale.
  • 3.1%: the original percentage stake CGU owned in Societe Generale.
  • £420m: the operating profits before tax and merger integration costs.
  • 5%: the rise in CGU's profits.
  • 7.5%: the increase in CGU's dividend.
  • 14.25p: the new dividend paid by CGU.
  • £55m: the additional cost savings expected from the merger.
  • £325m: the expected total cost savings from the merger.
  • 840p: the price of CGU's shares after the announcement.
  • 11p: the increase in CGU's share price.

Sources:

  • The Times of London, August 16 (no date mentioned)
  • CGU's press release (no date mentioned)