Profits at Norwich Union slipped in 1999 as the company admitted its general insurance side was working in "challenging market conditions".
At the pre-tax level, full-year profits fell 1% to £768m, although operating profit edged up 7% to £717m.
But despite the industry trend, UK general insurance continued to produce "strong returns", said chief executive Richard Harvey.
It was helped by the integration of ITT London & Edinburgh, which enhanced earnings and gave the general business a pre-tax technical result of £105m, a rise of 35%.
Harvey said the group's expense ratio remains the lowest among major competitors and it continues to drive down costs. Norwich Union Direct now has 1.4 million customers and made a profitable contribution in the year.
Harvey said: "Overall, Norwich Union is in great shape and our investment in future growth is paying dividends, as we continue to focus on our primary objective of growing shareholder value."
Norwich Union plans to merge with CGU.