Mutual insurance, retirement and investment provider LV= announces its 2012 life and pensions business results, with increased sales and profit compared to 2011.
♦ Underlying operating profit [1] up 7% to £26.3 million (2011: £24.5 million)
♦ Sales up 15% at £156.6 million on an APE basis[2] (2011: £136.2 million)
♦ Retirement and protection businesses both saw a 15% growth in sales with APE of £124.4 million (2011: £108.2 million) and £32.2 million (2011: £28.0 million) respectively
♦ A £50 a month 25 year savings endowment policy maturing on 1 March 2013 (for a male aged 30 next birthday at entry) will pay out £39,585, equivalent to an annual yield of 7.0%[3]
Richard Rowney, LV= Life and Pensions Managing Director, said: "2012 was another very successful year for LV='s life and pensions business, as we increased sales across our key business areas. As well as growth in underlying profit, an £89 million year-on-year improvement in short-term investment fluctuations contributed significantly to the overall growth in group profits before tax for the year.
"Our strategy of remaining focused on market segments with good growth potential, where we have considerable expertise, continues to differentiate us in an increasingly competitive industry."
LV= has maintained strong market positions in 2012. It is the market-leader for advised income protection and a top five provider for pension drawdown, enhanced annuities and equity release.
This was achieved against a challenging regulatory backdrop for the life and pensions industry as a whole, driven by the implementation of a number of regulatory and legislative changes including the retail distribution review (RDR).
LV='s life business has also maintained strong cost disciplines, with costs as a percentage of its liabilities improving from 4.2% to 3.6%. LV='s with-profits policies also continue to be among the best-performing in the market with 12 of 14 payouts being in the top quartile[4].
Highlights of performance by product:
- Pensions: 19% increase with APE £55.6m (2011: £46.7m)
- Protection: 15% increase with APE £32.2m (2011: £28.0)
- Annuities*: 13% increase with APE £59.9 (2011: £53.0m)
- Equity release: 5% increase with APE £8.9m (2011: £8.5m)
* Annuities includes enhanced, investment linked and fixed term annuity products
Richard Rowney continued: "Our focus in 2013 remains unaltered. We want to be the UK's leading retirement and protection specialist, through being in profitable, fast growth markets where we have relative scale. We plan to maintain our growth with the launch of new propositions in the protection and retirement markets. We are also continuing to invest heavily in the training and development of our people, to ensure we can provide outstanding service to advisers and customers."
LV= Group 2012 business results:
- Group underlying operating profit up 19% to £126.2 million (2011: £105.8 million)
- IFRS profit before tax and mutual bonus of £103.2 million (2011: loss of £16.9 million)
- Life underlying operating profit up 7% to £26.3 million (2011: £24.5 million) with sales up 15% at £156.6 million on an APE basis (2011: £136.2 million)
- General Insurance underlying operating profit increased by 53% to £117.1 million (2011: £76.4 million)
LV= General Insurance 2012 business results
- Underlying operating profit increased by 53% to £117.1 million (2011: £76.4 million)
- Underwriting profits impacted by adverse weather, with a combined ratio of 99.7%
- Strong investment returns of 5.8% (2011: 2.8%)
- Premium income grew to £1.49 billion with increased new business sales in direct (2011: £1.46 billion)
- Significantly improved pre-tax return on capital now at 17.7% (2011: 12.9%)
Mike Rogers, LV= Group Chief Executive, said: "In a challenging year LV= has been able to deliver record profits. Despite the uncertain outlook for the UK economy, we are confident that our successful business model and strong competitive position leaves us well placed for continued growth in 2013."
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