BRITISH life assurer Lloyds Abbey Life yesterday reported stronger than expected first half profits, cashing in on a recovery in life and pension sales and strong demand for investment products.

The company, majority owned by Lloyds TSB bank, said pre tax profits for the six months to June 30th surged by 28 per cent to £259.2 million sterling from a restated £201.8 million a year ago.

The dividend was up 12 per cent to 8.2p and Lloyds Abbey Life shares jumped 18p to 545p before slipping to 535p.

Analysts expected at best profits of around £235 million and were delighted with the group's performance.

"The figures were outstanding as far as we're concerned," said one analyst. "They beat our forecasts in almost every area. They're making progress in every area. New business growth was much, much, stronger and dividends were higher."

New business figures provided further evidence that life and pensions sales have recovered well from the depressed levels of a year ago.