April 27 (Bloomberg) -- Aviva Plc, Britain's biggest insurer and unsuccessful bidder for its largest domestic rival, increased life and pension sales 20 percent in the first quarter. It expects growth to slow this year.

Sales rose to 6.79 billion pounds ($12.1 billion), driven by strength in Europe and the U.K., compared with 5.66 billion pounds in the year-earlier period, the London-based company said today in a Regulatory News Service statement. That beat 16 analysts' mean estimate of 6.08 billion pounds, according to the company.

``This performance represents a very strong start to the year, and growth is expected to continue for the remainder of 2006, albeit at a lower level as stronger comparatives come through,'' the company said in the statement.

Aviva Chief Executive Officer Richard Harvey has said the company may seek acquisitions in Europe, the U.S. and Asia to accelerate expansion. The insurer dropped a 16.9 billion pound bid for smaller rival Prudential Plc last month, which would have helped the company expand in higher-growth markets in Asia.

Prudential last week said first-quarter sales rose by one- third to 637 million pounds, as growth in Asia outweighed slower expansion in the U.K. Legal & General Group Plc, the U.K.'s fourth biggest insurer, said yesterday that first-quarter sales gained 27 percent to 390 million pounds, driven by demand for investment products. Prudential and Legal & General use a different accounting method from Aviva.

Aviva's life insurance and pension sales in continental Europe rose 15 percent to 3.67 billion pounds, helped by sales in Poland, Italy and Ireland. In the U.K., sales gained 27 percent to 2.76 billion pounds. In Asia, where Aviva's sales base is smaller and growth is faster, revenue gained 39 percent to 129 million pounds. Aviva's margins from the new business were unchanged at 3.5 percent, the company said.

Aviva has said it plans to compete with insurers such as Prudential for bulk annuities in the U.K., whereby companies pay the insurer to take on their pension liabilities. In Europe, Harvey has formed alliances with banks including UniCredito Italiano SpA in Italy and Credit du Nord in France to sell more policies.

Investment product sales rose 72 percent to 1.1 billion pounds, the company said.

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Jon Menon in London at  jmenon1@bloomberg.net

©2006 Bloomberg L.P.