Royal & Sun Alliance said today it was seeing the benefits of its business shake-up as it posted a sharp rise in third quarter operating profits.

The insurer, now focused on general insurance and its More Than brand, said actions taken over the last 18 months to improve its performance were now clearly benefiting its results.

Last year, R&SA raised £960 million through a rights issue and moved to focus on its UK, Scandinavian and Canadian operations.

Cost-cutting resulted in about 1,000 UK job losses in September and job cutting continued in the first quarter of 2004, taking the group's headcount down to about 29,000.

R&SA said today that operating profits in the nine months to September 30 had risen to £453 million from £27 million last time.

Chief executive Andy Haste said the third quarter had been another good one for the group, with all businesses delivering results ahead of targets.

He said the results of the company's US business remained challenging and it was continuing to investigate "all possible future options" for the operation.

Mr Haste said: "I don't expect it to be a totally smooth ride and there are still challenges ahead, particularly in the US, but we remain focused on resolving them."

R&SA said its cost improvement programme across the group had achieved annualised savings of £180 million and it was confident of reaching its target of £270 million.

It said the group had targeted £10 million of savings from "business process outsourcing" in the UK, which would be achieved through reduced labour costs and increased productivity, although it did not give further details.

"Outsourcing is a key part of the strategy to ensure we have a more flexible cost base in the UK in the future," the group said.

R&SA said its UK operations continued to produce strong results in a favourable claims environment.

Overall commercial premiums were 4% down on 2003 as the group reinforced its focus on price over volume, although personal insurance continued to make good progress and there were improvements in More Than and its intermediated business.

The Scandinavian business turned in an "excellent" result, reflecting significant improvements to underwriting and pricing and actions to reduce claims costs across both its commercial and personal insurance businesses.

Plans to stabilise the US operation, which made an operating loss of £107 million during the period including a £14 million charge for the recent hurricanes, continued to progress as expected, R&SA said.

Mr Haste said the group's change programme remained on track.

"As I see it today, I'm confident we'll post a strong full year result from our ongoing operations," he said.