LVMar 28 2018

LV’s life and pensions profits almost triple

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LV’s life and pensions profits almost triple

LV saw its life and pensions operating profits almost triple in 2017, reaching £37m as sales increased.

In 2016 this figure stood at £13m, according to the company's annual results.

Meanwhile new business sales broke through the £2bn threshold for the first time to £2.02bn.

This was part due to the reposition of the life business to be "cash and capital generative" by closing capital consumptive products such as protection 50 plus and its protection financial advice service.

LV as a whole swung back into the black, posting an operating profit of £158m compared to a £12m loss in 2016.

Richard Rowney, LV’s chief executive, said 2017 had been a "transformative year" for the company.

He said: "I am very proud of what we have achieved. 

"We secured a landmark strategic partnership with Allianz, delivered the first stages of our £100m investment to transform our general insurance product and distribution capability and brought together our protection, retirement and heritage business areas under a single leadership as we begin to evolve life into a broader health, wealth and knowledge business."

Last August, Allianz Group agreed to pay £500m for a 49 per cent stake in LV’s general insurance business as part of a “strategic partnership” between the two providers.

LV saw its sales of retirement products increase 11 per cent to £1.7bn, which was also aided by savers looking to transfer funds from defined benefit (DB) to defined contribution (DC) pension schemes.

The volume of DB transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into DC schemes in order to access their cash using pension freedoms.

According to figures from the Office of National Statistics (ONS), funds transferred out of pension schemes almost tripled to a record £34.2bn in 2017.

Meanwhile income from LV's "strategically important" retirement advice service - provided by Wealth Wizards - grew 25 per cent year-on-year.

LV said this reflected growth in its corporate solutions distribution and the signing of a number of deals with new partners to provide direct access to regulated advice to their customers.

During 2017, the provider restructured its life business to bring its protection, retirement solutions and heritage businesses under one management team, promoting John Perks to the role of managing director for the combined business.

In December LV signed a deal with RGA to reinsure around £1bn of deferred annuity liabilities, de-risking its balance sheet. 

Looking forward, the company has "a clear focus on income protection, safe drawdown and equity release" as the areas of the market in which it intends to compete.

maria.espadinha@ft.com