DESPITE appearances, sales in York of Aviva's life insurance and pensions are doing well, it said.

Figures for the insurance giant's first quarter just issued suggest that sales of £2.513 billion are down two per cent over the same period last year.

But strip out sales of bulk purchase annuities which fell from £344 million in the first quarter of 2010 to £140 million in the three months to March this year, and underlying growth generated largely from York was seven per cent.

The reason for the drop in bulk purchase annuities was simply that Aviva chose not to write business that did not meet its financial criteria on profit making ventures, it said.

David Barral, commercial director for Aviva UK, based in York described bulk purchase annuities as "extremely lumpy".

He said : "It is not aimed at general customers, but employers - firms who are moving away from final pension schemes to group personal pensions, involving huge one-off transfers of cash perhaps £50 million or £100 million."

These had skewed the figures. "All our core sales such as individual and group pensions are up by a whopping 39 per cent, individual annuities up 21 per cent and life insurances, spurred on by the Paul Whitehouse TV ads, were up by eight per cent."

In fact, the brand recognition had leaped from 54 per cent at the end of last year to a peak of 58 per cent this year.

Numbers of Aviva employees at York were continuing to hold steady at just under 3,000, as a result of a steady redeployment of 300 people as a contract with HBoS begins to wind down to closure in 2012. "We always expected to absorb these people with growth and that is exactly what has happened," said Mr Barral.

The good news is that the insurance group has just announced that it has extended its deal with HSBC, which has named Aviva as a preferred strategic partner in the UK and Europe.

It means that the five year general insurance distribution deal signed between them in 2007 for home, travel and creditor business in the UK is now extended to 2016.