Life and general insurer Aviva bought Friends Life in a 5.6 billion pound deal in April, creating a market leader in life insurance.

British pensions reform and upcoming stricter capital rules for European insurers have prompted consolidation in the industry.

"The financial and strategic benefits of this deal are coming through loud and clear," Chief Executive Mark Wilson told reporters. "The acquisition has proven to be everything we expected it to be."

The value of new business climbed to 823 million pounds, up 25 percent from a year earlier.

The company's combined operating ratio, a key measure of performance in its general insurance business, strengthened by 1.9 percentage points to 94 percent. A number below 100 percent indicates a profit.

JP Morgan analysts called the results "a reassuring set of numbers", reiterating their "overweight" rating on the stock.

Aviva shares rose to a two-month high before trimming gains to 486 pence by 0828 GMT, up 1.3 percent compared with a 0.9 percent fall in the FTSE 100.

Aviva said it had achieved cost savings of 91 million pounds so far from the Friends Life merger, against a 225 million target. Wilson said the merger had produced capital savings of 300 million pounds this year, with "a whole lot more" expected in the next two years.

He reiterated that the group planned to make small "bolt-on" acquisitions across its global businesses, but said deal sizes would not total more than a few hundred million pounds.

(Editing by Simon Jessop and David Holmes)

By Carolyn Cohn