Insurance giant Aviva has only managed to squeeze in a 1% rise annual operating profit after earnings were squeezed by a high number of policy claims.

The group's general insurance arm posted a 39% fall in operating profits to £1 billion in 2007, reflecting £475 million of losses stemming from storms in January and the worst UK floods for 60 years in the summer.

The drop offsets a 35% improvement in profits at the company's life and pensions division.

Group operating profits were 1% higher at £3.29 billion, marginally ahead of recently revised City expectations.

The general insurance is extremely competitive, adding to Aviva's pressures. The net amount of premiums underwritten by Norwich Union, Aviva's UK retail brand, fell by 3% to £5.4 billion.

Chief executive Andrew Moss said: 'We remain positive in our outlook for our performance in the UK in 2008, given our broad product range and strong distribution. We believe that this will give us some resilience in uncertain markets, but expect market growth to be slightly lower than in 2007.'