Sun Life and Provincial Holdings, the parent company for Axa insurance and PPP healthcare, has announced increased pre-tax operating profits of £319m for 1999, up 29% (£247m 1998).

The surplus includes eight months' trading results from Guardian Royal Exchange which Axa acquired last May.

Cost savings from the merger at £85m are running 70% ahead of Axa's initial estimates.

Axa chief executive Andy Homer said the £62m saving in its general insurance operations had been achieved by streamlining products, office accommodation and IT systems.

However, profits on ordinary activities before tax fell £142m from £326m to £179m in 1999, partly as a result of the £99m Axa spent on its merger with Guardian.

And disposal of Guardian's non-core insurance operations, including its US property and casualty business, had reduced the original £3.4bn cost of the acquisition to just £841m.

In 1999, Axa achieved an operating profit on its general insurance business of £21m but this was £5m down on last year (£26m in 1998). Private motor rate increases averaged 18% on intermediary business and 14% on direct.

PPP healthcare, also acquired with Guardian, increased its operating profit by £27m to £31m in 1999, reflecting a reduction in expenses of £18m. Net written premiums grew by one per cent.