The company already employs 230 people in Cardiff

Zurich Financial Services, which already employs 230 people in the city, plans to build a �1.7m customer contact centre, creating more than 200 jobs.

The move has been described by the Welsh Development Agency - the body responsible for bringing inward investment into Wales - as "a major boost".

On the same day, the firm announced it was cutting 270 jobs at a facility in Leeds, with the possibility that some of the workers could be relocated to Cardiff.

Zurich's new office, at Dumballs Road near Cardiff Central station, is due to open in 2004 and recruitment will start at the end of this year.

Last November, Zurich cut 120 jobs in Prestatyn, north Wales, as part of 2,000 losses across the UK.

Last year, the company recorded a $3.4bn (�2.1bn) loss.

Staff from Zurich's existing Cardiff office at Fitzalan Court will be moved to the new building.

The investment has been supported by the Welsh Assembly Government with a regional selective assistance grant and also by the Welsh Development Agency (WDA).

This investment signals a clear a vote of confidence in the quality of the Welsh workforce Meurig Watts, WDA

Ian Owen, Managing Director of Zurich's Retail Financial Services Division, said Cardiff had beaten a number of other locations to land the scheme.

"The decision to remain and invest further in Cardiff reflects our satisfaction with the quality of the workforce and the local infrastructure," he said.

"These new premises will enable us to provide an enhanced service to our customers as well as a modern and comfortable working environment for our staff," he added.

Meurig Watts, from the WDA, said the expansion was a "very important boost" for the financial sector in Wales.

"The new jobs are highly skilled and well paid and this investment signals a clear a vote of confidence in the quality of the Welsh workforce," he said.

Zurich employs 70,000 people in more than 60 countries worldwide.