GROWTH in pension and life insurance products came more from international subsidiaries of Aviva than its York-based Norwich Union Life operation.

Aviva plc, the world's fifth largest insurer and parent company of Norwich Union Life, reported profits up 25 per cent to £2.344 billion - a full £121 million more than market expectation.

More than half - £1.611 billion - was accounted for by profits in life insurance sales which were up nine per cent on last year's.

Gary Withers, chief executive of Norwich Union Life, which employs nearly 3,000 people at York, conceded that international sales outstripped York's because the UK market was slower to take off after the falling stock market hit sales in the sector last year. He said: "I am still pleased with the UK life climate now. We are growing our profitability and margins and I am pleased with what we have achieved, but it will take time.

"We expect modest market growth in 2005 and a stronger pick-up thereafter."

He said York was the heart of life business. It was where the Norwich Union Life board was based and was the UK's biggest life insurer.

"We are confident for the future and well-placed for the market we are in."

Earlier this week Aviva unveiled a deal to buy the RAC for £1.1 billion.

The proposed fusion of the motoring services group with Norwich Union's general insurance group could mean that 900 jobs could be affected by combining support functions, with another 800 axed by switching its call centre services to Asia.

But Mr Withers stressed that the acquisition would "have no impact on York whatsoever." He said: "This is a transaction led entirely by the general insurance business.

"There may be, in the longer term, some opportunity for the life and pension part of the business to link up with the RAC in terms of all the options offered, but that has no impact on York."

The Aviva results come as Norwich Union Life prepares to take on 40 new jobs because of the company's centralisation of its marketing department at York head office.

It is the first good news on the jobs front since York's biggest private sector employer announced last June the loss of 150 posts largely due to IT outsourcing to India and another announcement in September that a further 60 posts would be lost.

It will mean that the total number of people in the company's national marketing division at York will be 310 by the end of recruitment in July.

Updated: 11:26 Friday, March 11, 2005