The UK's largest insurer CGNU has unveiled higher profits, and announced plans to pay investors a smaller dividend this year in order to fund future growth.

CGNU said on Wednesday that total operating profits for 2001 rose by 40% on the year to �2bn ($2.8bn), helped by strong growth in sales of life insurance and pensions.

The company added that it will cut its dividend - an annual payment to shareholders - from 38p per share in 2001 to just 23p this year in order to fund expansion plans.

CGNU said in a statement that the cut "strikes the appropriate balance between dividend payments and the retention of capital to take advantage of profitable growth opportunities."

It added that it plans to raise dividend payments by 5% a year from 2002 on.

In the City, CGNU shares were trading 7p lower at 790p early on Wednesday.

Name change plan

The company also said it will shortly ask shareholders to back plans to change its name to Aviva.

The proposed name change would not affect Norwich Union, CGNU's main UK insurance business.

CGNU was created in 2000 by a merger between UK insurance groups Norwich Union and CGU. This is the first set of full-year results from the merged company.

CGNU, like other insurers, was hit hard by heavy floods in the UK during the autumn of 2000.

The company said total sales for 2001 were boosted by a strong performance in mainland Europe, where from life insurance and pension sales jumped by 39% on the year to �5.5bn.

However, the downturn in global stock markets hit CGNU's fund management arm hard, cutting operating profits by more than half to �29m.