The overall effect, after hiring direct sales staff, will be a loss of 200 jobs at Swinton, which cost the group pounds 13m in closure provisions and losses in the first half.
The new direct sales operation will work with the Swinton branches and Roger Taylor, group chief executive, said it was not a prelude to shutting them all.
The move is part of the insurance industry's headlong rush into selling by telephone, which was pioneered by the Royal Bank of Scotland's highly profitable Direct Line subsidiary.
But Sun Alliance already has 1.25 million customers served by a direct sales operation under its own name. Mr Taylor said: 'We think we are large enough to carry two brands.' Royal Insurance has taken a similar decision.
Swinton, which now has 690 branches, said it planned new flagship outlets in city centres and out-of-town areas alongside the branch closures.
The group promised to redeploy staff wherever possible, especially in the Manchester area, where the telephone sales business will be established.
Sun Alliance yesterday reported trebled group pre-tax profits for the half-year to June of pounds 180.2m and a return to an underwriting profit in the UK. It made pounds 33m, its first British underwriting profit since 1989, against a loss of pounds 101m last year.
But there was intensifying price competition in some areas, which insurance analysts said was an early sign of an approaching downturn in the underwriting profits cycle.
Mr Taylor said the group's insistence on not taking low- priced business had led to 'some loss of volume in the face of keen competition' but it was looking to more sophisticated risk calculations to help it retain market share.
The interim dividend rises 5 per cent to 5.25p. The shares were unchanged at 332p.
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