The group, which is changing its name to RSA later this month, said it had seen personal insurance premiums increase to £265 million thanks largely to its More Than subsidiary.

Premium rates had increased by 5 per cent for personal motor insurance and by 4 per cent for household cover, but it said customers chose to stay with the group despite higher renewal costs with a retention rate of more than 80 per cent.

It added partnerships with corporate clients to provide "white label" insurance products had also contributed to the premium growth, with total UK net premiums up 3 per cent to £661 million in the first three months of the year.

The premium rate rises come after RSA was hit by £120 million in claims from last summer's UK floods, although the costs failed to prevent it from posting a 4% rise in 2007 annual profits.

RSA said today it had "taken the right action" with rates, despite tough competition in the UK market.

Andy Haste, group chief executive of RSA, said: "Market conditions remain challenging, however, we continue to exercise tight operational and financial management, including taking the right action on rate and expenses, to deliver sustainable profitable performance.

"We remain confident of achieving a strong result in 2008 and beyond."

RSA increased commercial insurance rates by 8 per cent for motor policies and 3 per cent for property, while professional liability rates were kept on hold, compared with a decrease of 4 per cent at the same time last year.

But its UK commercial business saw new written premiums remain flat at £396 million against £397 million in the same period last year.

Group-wide net premiums increased 15 per cent to £1.7 billion as the international business enjoyed a near-quarter rise in premiums to £893 million, with emerging markets premiums also seeing a double digit increase, ahead 23 per cent at £163 million.