Britain's largest insurer Aviva has beaten analyst expectations by reporting a 21% increase in H1 profits. Still the company raised doubts about prospects in the second half, warning that competition in its UK life and pensions market would affect margins.

For the first half of the financial year, Aviva’s operating profit totaled GBP943 million, a 19% increase compared to the same period in the previous year. The consensus forecast had been for operating profits somewhere in the region of GBP903 million.

Aviva, the world’s sixth largest insurance group, warned of tough competition in the UK domestic life and pensions market.

The general insurance division showed a much, much better performance than we had been expecting. On the negative side, the life result was a little bit weaker than we had been expecting. I think people may also be disappointed by the statement on UK margins, said analyst Johnny Vo in an interview with Reuters.

In the face of a decline in some general insurance prices, and margin pressure in the UK life and pensions market, Aviva said that it would focus on cost cutting and higher sales in its continental European life business to drive profits.

In Asia we continue to develop our footprint for the long-term with new distribution in India and access to new regional centres in China, said group chief executive Richard Harvey.