The group, Europe's largest mutual insurance company, said its new business sales rose 16% in 2002 and that its assets remain 14% higher than its liabilities - well above the 4% minimum required.

Earlier this week, Standard Life admitted it had contacted the Financial Services Authority (FSA) to ask for solvency rules to be relaxed.

But it repeated on Friday that its financial position was sound and that its policies would deliver in the long term.

Waiving the rules-

The company is anxious to reassure policyholders following press reports it would struggle to meet its commitments.

The Scottish-based group was the first UK insurer to admit it would seek a waiver from the FSA.

While some analysts saw this as a sign of its financial vulnerability, others suggested rivals would soon follow suit.

Stock market slumps have severely dented the value of insurers' investments and made it hard for them to meet payments to policy holders.

Earlier this week, insurance giant Legal & General reported a 7% fall in profits and said it would also consider seeking a waiver from the FSA.

Long term

Standard Life admitted 2002 had been "a challenging year, marked by extended stock market downturns around the world."

But it insisted that its investment strength was robust and that it had made the necessary changes to cope with the falls.

"We responded by altering the balance of our investment portfolio while still retaining a strong equity position and protecting the ongoing value of our with profits funds by reducing bonus rates and surrender values," said chief executive Iain Lumsden.

The insurer, along with rivals such as Aviva and Prudential has cut bonus payments to its with-profits policy holders in order to save cash.

But Mr Lumsden said the measures were taken to safeguard the investments for the future.

"Our with-profits funds still have significant exposure to equities because we believe that this will offer our members the best returns in the long term."

The company has said it will make an announcement on bonus payments in early May.