ROYAL and Sun Alliance (RSA) is slashing 1,000 jobs in the UK, despite recording a 17 per cent rise in first-half operating profits.

The troubled insurer is pursuing a relentless cost-cutting drive that has already taken its toll on 1,200 staff made redundant earlier this year.

The latest redundancies come as the company looks to outsource work to other firms.

RSA said the staff would themselves be outsourced to the new companies.

A spokesman for RSA said: "This is not a question of redundancies, this is a question of looking at outsourcing options."

A similar process announced earlier this year saw staff from its UK life and pensions division, now closed to new business, transferred to another operator.

Areas likely to be affected by the move include its property and facilities management operations.

Roger Lyons, joint general secretary of Amicus, said: "We will be working with the company every step of the way to ensure that these jobs do not go outside the UK."

But it is also planning to pilot a call centre facility for its MORE TH>N insurance business at an overseas site - possibly in India - with about 100 staff.

RSA said yesterday that it is to increase its annual cost savings target by £110m to £270m.

The news came as RSA disclosed that operating profits for the first six months of this year had risen to £351m from £301m a year ago as underwriting profits from insurance improved.

It also disclosed details of a widely-expected £960m rights issue to boost its balance sheet.

But while underwriting profits improved, the group's longer-term investment return was down by £107m.

And although UK underwriting profits in the second quarter were up sharply, in the US, it made an underwriting loss of £79m for the year to date - the vast majority of which came in the second quarter.

Disclosing the outcome of an in-depth review of the company, the group announced plans to sell large parts of its US business.