Norwich Union is owned by Aviva

Operating profit was �1.907bn ($3.58bn; 2.8bn euros), compared with �1.72bn in 2002, and the UK's largest insurer said signs for 2004 were "encouraging".

Increased sales of life and general insurance policies also boosted growth.

Aviva is closing a brokers subsidiary, with the loss of 1,600 jobs, and other posts are being moved to India.

Cost cuts

"We believe that the prospects for growth in 2004 in our long-term savings businesses are encouraging, with evidence that investors are gaining confidence," chief executive Richard Harvey said in a statement.

"We've driven improvement in our life business margins through pricing and expense control. We've also made operational improvements and reduced costs across the group in a very competitive market."

These are a cracking set of figures Roman Cizdyn, Commerzbank Click here to check Aviva's share price

He said Aviva also hoped to achieve �250m in annual cost savings.

The firm has suffered in recent years as share prices slumped, putting off investors and denting demand for pensions and insurance.

But the recent pick up in global economic growth and share prices seems to have revived Aviva's fortunes.

The group recommended a dividend of 24.15 pence, an increase of 5% from the previous year.

Investors welcomed the results, and Aviva shares closed up 18.5 pence, or 3.4%, at 561p.