AVIVA has pledged to hand more cash to shareholders after announcing a hefty jump in profits, despite taking a hit from Government changes to personal injury claims.

The insurer cheered a 12 per cent rise in operating profits to £3.01bn for the year ending in December, as it saluted a "breakout year" for its fund management arm.

Aviva Investors' assets under management rose close to a fifth at £345bn, with fund management operating profits climbing 32 per cent to £139m.

Net written premiums in the general insurance business rose 15 per cent to £8.21bn, while the value of new business within life insurance rose 13 per cent to £1.35bn.

The company runs general insurance and life insurance operations out of York.

Its upbeat message came as bosses said it would suffer a £380m blow from the Government's proposed changes to the Discount Rate calculation, which is expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.

Chief executive Mark Wilson said the firm was now tightening its focus on driving down debt and investing in growth.

He added: "Aviva's results are simple and clear-cut: more operating profit, more capital, more cash, more dividend.

"There is more to come."