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LV= Life and Pensions trading statement 2014

Press release: 02/02/2015

Mutual insurance, retirement and investment group LV= issues its life and pensions trading statement for the full year from 1 January to 31 December 2014.

Life insurance sales

3 months ended
31 December 2014

12 months ended
31 December 2014

12 months ended
31 December 2013

Year on year
% change

Life overall (PVNBP) [1]

£0.37 billion

£1.51 billion

£1.43 billion

6% increase

Retirement

£266 m

£1,128 m

£1,137 m

1% decrease

- Pensions

£183 m

£636 m

£587 m

8% increase

- Annuities

£62 m

£387 m

£457 m

15% decrease

- Equity release

£21 m

£105 m

£93 m

13% increase

Protection

£47 m

£217 m

£195 m

11% increase

Savings & Investments

£56 m

£168 m

£101 m

66% increase

2014 annuity sales can be broken down as enhanced £205m (2013: £320m), fixed term one year £43m (2013: £nil) and fixed term greater than one year £139m (2013: £137m). Savings and investments are predominantly with-profits investment bonds.


Richard Rowney, Managing Director for LV= life and pensions, commented: “Looking at sales over the full 12 months of 2014 I am pleased with our performance. We are reporting sales up £80 million compared to 2013; however there has been a distinct change in product mix and a reduction in margins.

“As expected, following the Chancellor’s announcement that annuities will no longer be compulsory, we have seen a drop in sales in enhanced annuities, however sales have been good in other products, particularly in equity release, fixed term annuities and bonds, as people increasingly choose to take other retirement income products that offer a level of guarantee. Looking at the last quarter specifically, sales in pensions and savings & investments have been particularly good, outstripping the first three quarters.

“We believe we will continue to see this change of buying habits and increasingly people will opt for flexible or blended solutions, with a level of financial security, that enable them to tailor their income for their personal retirement plans.

“LV= is very well placed for these developments as we are one of the only providers to offer a wide range of retirement income solutions. Furthermore unlike other providers we have been offering these products for some time so have a considerable level of expertise, demonstrated by the fact that we will be ready to offer flexible access drawdown by 6th April, unlike many of our competitors.

“Over the last few months, since the Chancellor’s news, our research and development team has been working on some exciting new propositions to help advisers and their clients, plus consumers themselves, make an informed choice of which product or products might be right for them. We will be launching our retirement account proposition in April, enabling easy quotation and purchase of multiple products together, for example variants of annuities and drawdown in one policy, alongside some simple tools that bring to life clients’ retirement income choices.

“In addition, as part of our commitment to support advisers, we have recruited an additional 70 service employees, to help with increases in business volumes, changes in income requirements and general queries.

"Our protection sales of £217 million are up 11% compared to 2013 as we continue to target market segments where we can clearly demonstrate value to our customers. In protection we aim to be a top five player competing on quality of proposition, whilst recognising the importance of price and we maintained our leading position as the first choice of advisors for protecting incomes.

“Key factors supporting these continued strong sales are our unique people based culture and focus on providing an excellent level of service to customers. The strength of our customer service proposition has most recently been demonstrated in a report from the Institute of Customer Services in January which showed not only are we the number one insurer for customer service but we are amongst the highest performing businesses in the UK across all sectors comparable against John Lewis, Marks & Spencer and First Direct. This is a tremendous accolade for our business and our people.

“Overall, despite the challenges we faced in 2014, sales have been good and our focus on good value products and a market-leading level of service for our advisers and customers means we can confidently expect to see continued attractive returns for members over the medium term.”

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About LV=

LV= employs 6,000 people and serves over 5.5 million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.


[1] Present Value of New Business Premiums (PVNBP) is the total of new single premium sales received in the year plus the discounted value, at the point of sale, of the regular premiums we expect to receive over the term of the new contract sold in the year. For equity release this represents the amount of loans provided. We have moved to reporting on a PVNBP basis rather than APE (Annual Premium Equivalent) which we have reported historically as we believe PVNBP is a clearer representation of sales.