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LV= General Insurance announces record profits

Press release: 26/02/2013

LV= general insurance, the UK's third largest private motor insurer with over three million in-force policies, announces results for the year to 31 December 2012.

2012 financial highlights:

  • Operating profits increased by 53% to £117 million
  • Underwriting profits impacted by adverse weather, with a combined ratio of 99.7%
  • Strong investment returns of 5.8%
  • Premium income grew to £1.49 billion with increased new business sales in direct and a 40% uplift in SME premium income in broker
  • Significantly improved return on capital now at 17.7%




Gross written premiums



Underwriting profit



Investment return*



Operating profit**



Loss ratio



Expense ratio



Combined ratio



Return on capital employed



Motor in force policies



Total in force policies



*Investment return is presented net of investment expenses
**Operating profit is underwriting profit plus investment return

The general insurance business of LV= continued to grow steadily during 2012 and now has around 11% market share of the private car insurance market. LV= grew strongly in its target markets and reduced its exposure to less profitable segments of the market.

The two core business areas, the direct and broker channels, now underwrite 2.7 million and 1.4 million policies respectively. Both channels contributed to the operating profits at £64 million and £53 million respectively.

The combined operating ratio for 2012 of 99.7% meant that the business delivered an underwriting profit of £5 million. The reduction in underwriting profits relative to 2011 was primarily driven by claims arising from adverse weather conditions which impacted profits by about £25 million, together with a further increase in personal injury claims frequency. This was partly mitigated by a further improvement in the expense ratio.

Active, but conservative management of the investment portfolio and a general uplift in markets during 2012 produced a total return of 5.8% (2011: 2.8%), contributing strongly to the overall record trading profits.

Strategic progress

Gross written premiums grew by 2% overall. The direct business continued to grow strongly, increasing the number of in-force car insurance policies by 17% to 1.78 million. Gross premiums written in car insurance rose by 15% to £662 million. Within home insurance the direct business grew by 6% to 529,000 in-force policies.

The broker business wrote £655 million of gross written premium, primarily in commercial lines and motor personal lines. In commercial lines, LV= achieved a strong growth in premiums written – an increase of 16% to £160 million. Within this, SME premium income increased by 40% to £75 million and commercial motor business grew by 1% to £85 million. Motor personal lines sales were down by 16% to £481 million. This was as a result of a deliberate policy not to compromise underwriting margins as market prices reduced due to increasing competition.

John O'Roarke, managing director of LV= general insurance, commented: "An increase in profits of over 50% is an excellent result for 2012 and represents our fifth successive year of growth in both profitability and premium income. Our direct business continues to go from strength to strength benefiting from good growth in new business sales and excellent customer retention. In our broker business, the highlight has been a 40% increase in SME premium income and increasing recognition of us by brokers as a trusted and proactive player in this market."

"Looking ahead I'm confident that our focus on offering good value and great service plus the strength of our increasingly recognised brand, will enable us to continue to generate strong returns for our members."

Mike Rogers, LV= Group CEO commented: "Our general insurance business continues on its upwards trajectory and I am delighted to be reporting another year of consistent growth in profitability. For the first time the GI companies returned capital to the group amounting to £38 million."

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LV= employs over 5,500 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.