The Investment Column: Unit trust sales boost LAL

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There are few better signs of the top of a bull market than surging unit trust and PEP sales - as market cynics like to point out, when the private investor gets round to investing heavily in the stock market it is normally a clear signal to the professional to pull out for a while.

If you believe that argument then better-than-expected figures from Lloyds Abbey Life yesterday presented a worrying augury. A 28 per cent jump in pre-tax profits to pounds 259.2m (compared with expectations of, at most, about pounds 235m) was driven by sales in the core Abbey Life and Black Horse Financial Services arms of pooled investments and savings plans.

Sales of unit trusts jumped in the first six months from pounds 139m to pounds 312m, almost as much as the group sold in the whole of last year. There was a 77 per cent rise in regular contribution Peps.

The biggest surprise in LAL's figures for the six months to June was provided by Lloyds Bank Insurance Services, which provided an unexpected 33 per cent jump in profits as policies to back unsecured loans boomed.

Lloyds Abbey Life is plainly enjoying a long overdue uptick in trading, and longer-term saving trends are acting in its favour. But in the short term, the interest in LAL's shares lies in the result of ongoing negotiations regarding the future of the two-thirds stake in the company held by the newly merged Lloyds TSB group.

Whether the parent chooses to buy out the minority at a premium, or simply eliminates overlaps with the former TSB bancassurance operations, the result should be good for LAL. The shares have had a tremendous run since bottoming out at little over 300p at the beginning of 1995, so at 535p, up 8p, much of the good news is already in the price. With a forecast yield this year of 5.5 per cent, however, the shares are nicely underpinned.