Insurer fears backlash over pensions row: Lloyds Abbey 13% up in first half

PRE-TAX profits at Lloyds Abbey Life, the insurance group controlled by Lloyds Bank, rose 13 per cent to pounds 171.8m at the halfway stage, but the group warned that increased regulation and public fears about selling methods would dampen demand for life products in the second half.

The recent row over transferability of pensions and criticisms of the insurance industry's selling methods, prompted Lloyds Abbey to launch a retraining programme for its sales force.

The fall in sales was due to a 'lowering in consumer confidence in the selling standards in the industry', which left people reluctant about long-term life assurance.

Stephen Maran, Lloyds Abbey chief executive, said the company had stopped its pensions transfer business last year and would resume only after the Securities and Investment Board had reported.

The company refused to reveal its provisions against possible wrongful pensions transfers.

Mr Maran said the new disclosure rules on commission from next year might have a further impact on life sales.

The growth in group profits was led by Lloyds Bowmaker, the lending arm, where bad debts fell almost two-thirds to pounds 9m. This enabled Bowmaker to almost triple profits to pounds 33.5m, but the fall in bad debt is not expected to be repeated in the second half.

Black Horse Financial Services, which sells to Lloyds customers, saw profits decline from pounds 60m to pounds 44m.

The 1,800-strong staff spent 25,000 days training in the first half, nearly a fifth of their working time.

The results were towards the upper end of analysts' forecasts while the dividend was higher than expected at 6.8p against 6.3p.

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