June 9 (Bloomberg) -- Aviva Plc, the U.K.'s biggest insurer by premiums, will cut 700 jobs at its Norwich Union life insurance unit and transfer some functions to India, as it presses ahead with cost cuts after reporting its first annual net income since 1999.

Most of the staff reductions will be compulsory, as some computer services and software development functions are transferred to companies in India and other countries, the London- based company said in an e-mailed statement. Norwich Union will also cut 250 contract worker positions, the statement said.

``Recent market conditions in the U.K. long-term savings market have been tough and we have to ensure that the company continues its drive for efficiency,'' said Norwich Union Life Chief Executive Gary Withers in the statement.

Aviva's Chief Executive Richard Harvey has cut thousands of jobs and is selling some assets after the longest bear market since World War II eroded capital. In February, Aviva posted its first net income since 1999, as rebounding stock markets boosted investment gains and insurance earnings jumped.

``A significant part'' of the job cuts today will go to India, said David Taylor, Norwich Union director of business services and strategy in a telephone interview. The company is negotiating with technology services companies about the plans to be completed by the end of 2005, said Taylor.

Norwich Union offices in Norwich, York, Bristol, Stevenage and Croydon, England will be affected, the statement said. Some functions may also be moved to companies with operations in the U.K., Europe and U.S., it said.

Union Opposition

Amicus, the U.K.'s biggest private sector union will meet with Norwich Union management next week to examine the business case for the cuts, said National Secretary Dave Fleming in an e-mailed statement.

``We will vigorously oppose any compulsory redundancies and any offshoring of these jobs abroad,'' said Fleming.

Aviva cut 1,600 jobs in February when it shut down its Hill House Hammond insurance units to boost competitiveness by selling policies directly. In December, Aviva said it would shift about 2,350 jobs at its British unit to India to reduce costs, in addition to 900 jobs cut in Britain last July.

Aviva and other British insurers including Friends Provident Plc and banks such as HSBC Holdings Plc and Lloyds TSB Group Plc are employing cheaper workers in India to fill administrative and services roles.

Aviva employs 33,000 people in the U.K., including 15,000 in it life business, the company said. Before the cuts Aviva employed 1,400 people and 350 contractor employees in its life unit services division.

Aviva shares were down 0.3 percent at 548 pence at 11:45 a.m. in London.

To contact the reporter on this story: Jon Menon in London at jmenon1@bloomberg.net

Last Updated: June 9, 2004 06:49 EDT