Britain's third biggest insurer saw shares rise six per cent on news of the half-year operating profits, up from £589m to £626m, based on a European embedded value (EEV) industry standard.
Most analysts expected them to remain flat or dip.
The group said sales of bulk annuities, which provide a set income in retirement, more than tripled amid the trend for firms to offload their pension liabilities.
They offset a 22 per cent decline in sales of individual annuities, hit by increased competition and L&G's pricing policy in the past three months.
But the downturn in the housing market impacted sales of insurance protection policies.
Stock market turmoil also wiped 91 per cent off EEV post-tax profits - to £56m - as falls in equity values led to unrealised losses on investments.
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