Insurance group LV has revealed its first half profit before tax was down by 47 per cent to £47m from £88m in 2013, due to ‘short-term investment fluctuations’.
The group said underlying operating profit also decreased to £7m from £11m during the same period last year, reflecting lower margins on enhanced annuities sales and increased sales of less profitable fixed term annuities.
Total life business sales increased 9 per cent to £55m, while the retirement business saw an 11 per cent increase in sales to £566m. Protection sales dropped slightly to £96m, from £97m in H1 2013, while with-profit sales were up to £70m from £44m last H1.
Mike Rogers, LV’s chief executive, said group’s operating profit of £39m for the first half was a good achievement in tough trading conditions for both general insurance and life businesses.
“We’ve seen events affecting both businesses, with continued pressure on motor premium rates impacting general insurance and the Budget affecting our life business, so given this backdrop, we can be pleased with our performance for the year-to-date.”
LV’s life business produced an underlying operating profit of £7m for the six months to end of June, with the reduction primarily driven by reducing margins on new business following the Budget changes in March.
The company was first into the market with a one-year fixed-term ‘annuity’, which is actually written under drawdown rules, and also launched a new simplified drawdown product in response to the pensions freedoms.
The company stated that more people will look at blended solutions next April, “and the certainty and guaranteed income that our annuities provide will also continue to have a place in the new retirement landscape.”
Mr Rogers added: “A degree of uncertainty will remain for our retirement solutions business until more clarity is provided on the new pensions landscape, however we are supportive of the government’s decision to ensure that guidance offered to all retirees is provided independently as we believe this will help ensure the right consumer outcomes.”
LV also claimed to be the umber leading provider of income protection insurance sold by advisers. In April, LV announced updated enhanced critical illness cover and in May it launched a new personal sick pay policy to protect the income of a wider range of customers.
