FEARED cuts of thousands of jobs following the merger between CGU and Norwich Union could fail to materialise with news of huge interim operating profits for the newly-formed CGNU.

When CGU merged with Norwich Union in a £19 million deal to create CGNU, it was anticipated that 4,000 people would lose their jobs across the country.

But CGNU's interim operating profits were revealed to be up 42 per cent to £977 million, showing stronger than expected growth.

This means that UK job losses may not need to reach the 4,000 figure.

The news follows the announcement of record half-year profits for Norwich Union Life of £4.1 billion, as reported in the Evening Press last month.

More than 2,000 people are employed by Norwich Union Life, of which CGNU is the parent company, at various offices in York.

Other key unaudited results from the CGNU interim report include:

Worldwide life achieved operating profit up 12 per cent to £857 million

Record half-year worldwide long-term savings new business sales at £7.1 billion

New business contribution up to £272 million, from £236 million last year

General insurance operating profit up 124 per cent to £427 million, benefiting from the actions to improve performance and lower weather-related claims

Interim dividend of 14.25p net per share.

Commenting on the latest figures, Richard Harvey, CGNU chief executive, said: "These are a strong set of results with operating profit up 42 per cent to £977 million.

"The results included a 12 per cent increase in life-achieved operating profit and a significant improvement in the performance on the group's general insurance business.

"We continue to capitalise on the substantial long-term savings opportunities in Europe.

"We are using strong market positions to grow our business organically and are extending our distribution capabilities, in particular by entering into new bancassurance agreements."

Mr Harvey added: "We have taken our first significant step into long-term savings in South-East Asia though our bancassurance partnership with the Development Bank of Singapore.

"We are confident of using our expertise in bancassurance to deliver value from this agreement.

"As the sixth-largest insurance group in the world, and the largest in the UK, we have the size, expertise, financial strength and brands to succeed."

Meanwhile, the company has confirmed that its premiums on home and motor insurance are more likely to rise in the current year, than to drop.

A spokesman for Norwich Union said: "This situation is largely down to claims inflation, as a result of the amount of claims that are being made as a result of accidents."

Another reason, said the spokesman, was that the firm was having to pay out higher lump sums to people who had suffered severe injuries, and were receiving insurance cash for life.

He added that the rate of the rises was not yet known.