LV blames tax changes, gender rules for sales fall

Insurance provider LV has reported a rise in underlying profit for 2013 despite falls in both retirement and protection business.

In its full-year results for 2013, LV reports underlying profit of £29m, up 12 per cent from £26m in 2012.

However, retirement business experienced a 5 per cent fall in sales, with annual premium equivalent reaching £119m, down from £125m the previous year. Likewise, protection business fell 9 per cent with an APE of £29m, down from £32m in 2012.

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These factors contributed to a decline in overall new business of £3m, down from £25m the previous year.

The company said in a statement: “Although overall sales in protection new business contributions were lower than 2012, we are pleased with overall performance and the new business contribution of £2m, taking into account the adverse market conditions as a result of the tax changes and gender rules.”

This reflects the argument made by specialist annuity provider Just Retirement, which reported a downturn in underlying operating profit due to business “pulled forward” into 2012 by the Retail Distribution Review and gender-equal pricing.

These changes also contributed to a decline in external non-standard annuity sales at Partnership Assurance Group.

Overall, LV’s group operating profit was up 19 per cent to £105m, from £88m in 2012.

Regarding the changes wrought by chancellor George Osborne in this year’s Budget, LV said: “We believe that the certainty and guaranteed income that annuities provide will have a place in the new retirement income landscape.

“In the short term however we expect whole of life annuity sales to be impacted, and in the long term other options will now be given more consideration.”