Insurer Royal & Sun Alliance said it would cut 1,550 jobs, including 1,000 in the UK, as part of a programme to shrink costs by 130 million pounds by mid-2008.
The savings, which represent around nine per cent of the company's 2005 cost base, will cost around £100 million, RSA said, but will be funded by the expected cost cuts over the next two years and will not knock profits.
The company said it was in talks with employee unions both in the UK and Scandinavia to minimise the number of compulsory redundancies. Of the remaining job cuts, 350 will be made in its Scandinavian operations, 160 in its international unit and 40 in its corporate support staff.
The job cuts are part of the company's plan to shrink its expense ratio in the UK and Scandinavia to below 15 per cent, it said.
"It's a necessary step, because its expense ratios are higher than some of their competitors, so it had to do something about them. This is a step in the right direction," said Youssef Ziai, an analyst with Williams de Broe.
The country's second-largest commercial insurer made the announcement ahead of a presentation to investors and analysts on yesterday afternoon.
RSA's shares were the top FTSE 100 gainer, up 3.7 per cent at 127-1/2 pence at 1154 GMT (12.54 p.m. British Time).
RSA also announced plans to expand its various businesses. "The premium growth targets are ambitious," said Mr Ziai.
In the UK it said that despite competition being stiff, it had entered into a number of new deals so far this year that would bring annualised premiums worth £200 million.
As part of its plans to post annual double-digit percentage sales growth in its international division, RSA said it had agreed to buy the personal lines business of Shilling Insurance Brokers, which will add about £20 million in premium to its Canadian subsidiary, Johnson.
The company is also looking to double its premium income from the Baltic insurance market. RSA said its Scandinavian subsidiary Codan is to buy out the minority shareholders in its Latvian and Lithuanian businesses for £53 million and would enter the Estonian market early next year.
It also said that Codan planned to buy back up to £100 million of its shares in the market, although RSA would not be selling any of its 72 per cent stake in the firm.
The CEO of Codan, Jens Erik Christensen, would retire at the end of the year, RSA said.