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LV= Q3 2014 trading statement

Press release: 27/10/2014

Mutual insurance, retirement and investment group LV= issues its trading statement for the nine month period from 1 January to 30 September 2014.

General insurance sales

General insurance sales

9 months ended
30 September 2014

9 months ended
30 September 2013

12 months ended
31 December 2013

Gross Written Premium (GWP)

£1.08 billion

£1.13 billion

£1.45 billion

GWP by channel:

- Direct

£616 m

£644 m

£824 m

- Broker

£464 m

£483 m

£621 m

GWP by product:

- Motor (private)

£743 m

£835 m

£1,054 m

- Home

£138 m

£117 m

£155 m

- Commercial inc. SME

£170 m

£147 m

£201 m

- Other

£29 m

£28 m

£35 m

Motor in-force policies

3.0 m

3.1 m

3.1 m

Total in-force policies

4.5 m

4.4 m

4.4 m

Life insurance sales

Life insurance sales

9 months ended
30 September 2014

9 months ended
30 September 2013

12 months ended
31 December 2013

Life overall (PVNBP)

£1.14 billion

£1.03 billion

£1.43 billion

Retirement

£862 m

£816 m

£1,137 m

- Pensions

£453 m

£447 m

£587 m

- Annuities

£325 m

£307 m

£457 m

- Equity release

£84 m

£62 m

£93 m

Protection

£170 m

£146 m

£195 m

Savings & Investments*

£112 m

£69 m

£101 m

Present Value of New Business (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.

* Savings and investments are predominantly with-profits investment bonds.


Mike Rogers, LV= Group CEO commented:

"Nine months into 2014 sales in both trading businesses have been good in a challenging market.

"In our life business sales are up £100 million compared to this time last year and we have achieved over £400 million of sales in just the last three months. Margins post-budget are generally lower driven by the business mix in our retirement business, but these strong sales are a great achievement and testament to our customer-focused range of products.

"Within retirement, sales are good across the board, with our drawdown products, equity release, and our one year fixed term annuity, which we launched in April, proving particularly popular following the changes announced to the retirement landscape in March. Our with-profits investments portfolio continues its strong year with sales now up over 60% compared to 2013. We believe this is also being driven by the pension market-place changes now annuities are no longer compulsory. More retirees are shopping around for investment products with a level of guarantee which these products can offer. We offer a full range of 'at retirement' products and we are well placed to benefit from the changes as more retirees look for different financial solutions for their retirement.

"Looking at protection, the last quarter has seen good sales and we are now up £24 million compared to this time last year. Given sales were relatively comparable to 2013 three months ago I am particularly pleased with our performance in this last quarter. The increase includes strong sales of our new income protection product. In the last few weeks we have also added to our awards portfolio, winning Moneyfacts award for the best income protection provider.

"In general insurance, we continue to diversify away from motor with SME growth promising with sales up £23 million compared to this time in 2013 and we now insure over 800,000 homes and cover 800,000 customers against car breakdown. We are proud to have recently been voted Insurer of the Year at the UK Broker Awards, demonstrating our commitment in both commercial and personal lines to an excellent level of service for brokers.

"The portfolio split, with three million of our customers in car insurance, is reflected in overall GWP which is down compared to 2013, primarily driven by lower rates in motor, where we continue to see pressure on premiums. We have chosen not to take on unprofitable business in motor and to retain strong underwriting discipline. We do not believe current prices are sustainable, however there have been some limited signs of upwards movement in prices recently and we expect them to continue to increase in the coming months.

"Entering the last quarter of the year overall I am pleased with our progress in both business areas. I believe our focus on being easy to do business with, caring for our customers, and offering good value products means we are well placed to deliver satisfactory results at year-end."


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For further information please contact:

Emma Banks, emma.banks@lv.com, 0208 256 6714 / 07894 158 605


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.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.