AN assurance that Norwich Union Life will continue to operate with about 3,000 employees in York was given today, but big pressures to cut costs remain.

The warning was given by Gary Withers, Norwich Union Life's chief executive, as parent company Aviva announced that first-quarter worldwide sales of long-term savings were up four per cent to £3.914 billion.

In the UK, however, there was a small one per cent drop in sales of life and pensions generated by Norwich Union Life headquartered in York to £1.494 billion, although its UK investment sales soared by 89 per cent to £252 million.

Mr Withers, said that while the markets were stabilising, conditions in the UK remained difficult, and improvements now were based on last year's market collapse, in which figures were at levels not seen since 1998.

He said: "We are now seeing a steady growth back."

York's contribution, he said, had been "very strong", but he warned that there was still a need to "drive efficiency through the company" to maintain competitiveness, gradually and in a measured way reducing its numbers.

"We have already introduced a whole host of measures to help us maintain our efficiency and in York, where there are 3,000 employees, the company will continue to operate at these levels. Where jobs have been affected, there are attempts to redeploy," he said.

Richard Harvey, group chief executive of Aviva, said: "This is a pleasing start to 2004, with total sales and the group margin both ahead of the same period last year.

"The UK market remains tough, but we continue to focus on value rather than volume. We believe we have continued to improve our competitive position," he said.

Mr Harvey said there was steady growth in continental Europe, and said they were "highly confident" about the potential for the markets in France, Italy, Spain and the Netherlands.

"Investment sales doubled to nearly £400 million compared with the same quarter last year, indicating that there is some evidence of consumer confidence returning - although this is more pronounced in some markets than others," he said.

Updated: 14:40 Wednesday, May 05, 2004