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LV= general insurance announces first half 2013 results

Press release: 29/07/2013

LV= announces its general insurance results for the period ended 30 June 2013.

Half year 2013 results:

  • Operating profit of £43m (2012 HY: £62m)
  • LV= now UK's third largest car insurer* with 3.1 million policies
  • Premium income of £748m (2012 HY: £747m) despite market conditions remaining very competitive
  • Combined operating ratio (COR) up 0.6% to 97.6% (2012 HY: 97.0%) due to falling premium rates
  • Investment returns of 2.6% (2012 HY: 4.4%)
  • Customer renewal retention rate of 79% (2012 HY: 79%) on car and 82% on home (2012 HY: 84%)
  • SME premium income up 28% and home income up by 9%

*measured by number of in-force car policies

This is a solid performance against a backdrop of weakening motor rates, intense competition and low investment returns. The two core business areas, direct and broker, now underwrite 2.9m and 1.4m policies respectively. Both channels contributed to the operating profit at £23m and £20m respectively. We've grown our home insurance customer base by almost 50,000 policies over the past 12 months and in our broker business, the highlight has been a 28% increase in SME premium income, as a growing number of brokers have come to recognise us as a trusted and consistent partner in this market.

John O'Roarke, managing director of LV= general insurance

Results summary:


6 months 2013 (unaudited)

6 months 2012 (unaudited)

Full year 2012 (audited)

Gross written premiums (GWP)




Underwriting profit




Investment return




Operating profit




Loss ratio




Expense ratio*




Combined ratio




Return on capital employed




Motor in-force policies




Total in-force policies




*The expense ratio includes ancillary income

LV= general insurance continued to grow during the first half of 2013 and is now the UK's third largest private car insurer with an 11% share of the market. The profitable half year result was delivered despite tough price competition seen across all distribution channels as motor premium rates continued to fall.

The combined operating ratio of 97.6% means that the business delivered an underwriting profit of £17m for the first half of 2013. Within this, the loss ratio of 73.6% showed an improvement on the same time last year. The expense ratio at 24.0% was slightly higher than 2012, which is a result of reducing car insurance rates and therefore lower premiums.

The financial markets experienced significant volatility in the first half of 2013, which meant it was not possible to repeat the exceptional investments performance seen during the same period last year. Nevertheless, the asset portfolio produced a total investment return of £26m (equating to a 2.6% annualised return), contributing to the overall operating profit of £43m.

Strategic progress

The direct business grew strongly relative to H1 last year, increasing the number of in-force car insurance policies by 11% to 1.9 million. In addition our home customer base increased by 9% to 621,000 policies. Total direct GWP reached £423m, driven by a high renewal rate and strong new customer growth.

The broker business wrote £325m of GWP. In commercial lines, LV= achieved good growth in premiums written with an increase of 18% to £94m. SME premium income increased particularly strongly by 28% to £46m and commercial motor business grew by 10% to £48m. Overall broker motor personal lines revenue was down by 10% to £222m, despite an increase in customer numbers, reflecting materially lower premium rates within the market.

I expect to see continued growth in SME and home in the second half of the year. This will help mitigate the impact of overly competitive conditions in the core motor business. I remain confident of delivering good returns for our members despite a relatively challenging outlook for the market as a whole in the short-term.

John O'Roarke commenting on the outlook for the second half of 2013

Our general insurance business continues to perform well in a more difficult motor market. As a significant part of the success of LV= I look forward to releasing the full group results, due out 9 September, which will include the full results of the life business and group overall.

Mike Rogers, LV= Group CEO

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LV= employs over 5,700 people and serves over five 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.