Lloyds Abbey Life profits surge

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The Independent Online
Lloyds Abbey Life yesterday confirmed the continued bounce-back in the life and pensions market from the mis-selling scandals with a storming 30 per cent rise in profits to pounds 548m.

The record figures for the 12 months to December - the last as a separately quoted company - help explain the recent decision by Lloyds TSB, the group's parent, to spend pounds 1.7bn buying out the 37 per cent of the shares it did not then own. They also provide a foretaste of the record pounds 2.5bn profits the bank itself is expected to report in its own 1996 results due out tomorrow.

The LAL figures were driven by strong growth in unit trust and pension sales. Although LAL has taken a further pounds 13.7m charge for pension mis- selling, bringing the total provision to pounds 98.6m, Laurel Powers-Freeling, finance director, said: "People are more confident buying pensions again and I think that will continue." Economic conditions were favourable, while the industry had come through the bad publicity, she believed.

But the big growth in 1996 came in unit trust sales, which soared 56 per cent to pounds 505m, against a 5 per cent increase in regular premiums to pounds 127m and a 6 per cent uptick in single premiums to pounds 704m. Mrs Powers- Freeling said the unit trust performance was economically driven. "The whole industry has done well and in a time of rising equity markets, people are attracted to unit trusts," she added.

The biggest contributor to the increased profits was Black Horse Financial Services, the broker dedicated to selling to the bank's customer base which is shortly to be merged with the TSB life insurance operations. Profits there soared 32 per cent to pounds 160m.

Other strong performers in the year were Lloyds Bank Insurance Services, the broking operation, where profits climbed 44 per cent to pounds 133m and Black Horse Agencies, the estate agency chain. That returned to the black with a pounds 4m profit, reversing a pounds 9.5m loss last time. Abbey Life, the business aimed at independent financial intermediaries, saw its profits rise 12 per cent to pounds 167m.