FRANCE'S biggest insurer, Union des Assurances de Paris, has announced a return to profit in the first half after racking up a large loss in 1995 and said it was on track to achieve "lasting profitability".

UAP, which launched a sweeping recovery programme at the start of 1996, said net attributable profit rose to 860 million francs (£103.6 million) from Ffr806 million a year earlier on consolidated premium income that rose 6.6 per cent to Ffr86.4 billion.

The results marked a turnaround for UAP, Europe's second largest insurance group, which owns 83 per cent of New Ireland Holdings. It posted a full year 1995 loss of Ffr2.07 billion, the first in its history.

The loss included an exceptional second half charge of Ffr4.5 billion for provisions against doubtful property loans following the collapse of French real estate prices.

We re on the right track, UAP's chairman Mr Jacques Friedman told reporters, adding that the results were built on a "healthy basis" and came in the face of a big fall in capital gains.

Shares in UAP, whose performance has sorely disappointed investors since its privatisation in 1994, rose nearly 4 per cent but then retreated to close up just 1.4 per cent at Ffr108.5. The company was sold off at Ffr152.

Insurance analysts said UAP, whose results were hammered in previous years by provisions to cover exposure to France's long running property slump, had made big strides.

"The results are robust given their past problems, but compared to the rest of the market, they've got a long way to go," said Deutsche Bank analyst Mr Jean Baptiste Bellon. Mr Friedman announced at the start of the year a drive to cut, costs, slash debt, restructure international operations and dispose of assets to restore profitability.

"For the first time in several years, the improvement in our operational result is finally showing through in our net consolidated profit, he said.