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LV= Q3 2015 trading statement

LV= issues its life and pensions trading statement for the nine month period from 1 January to 30 September 2015.

  • Pensions sales increased by 40%, driven by a rise in demand for income drawdown.
  • Sales of flexible guarantee bonds increased by 153% as retirees look for alternative financial solutions.
  • Protection sales increased by 35% with continued strong growth in income protection.
  • Life and pension sales

9 months ended 30 September 2015

9 months ended 30 September 2014

Percentage change

12 months ended 31 December 2014

Life overall (PVNBPi)

£1,339 million

£1,102 million

22%

£1,498 million

Retirement

£1,130 million

£947 million

19%

£1,281 million

- Pensions

£615 million

£440 million

40%

£636 million

- Annuities*

£222 million

£325 million

(32)%

£387 million

- Flexible guarantee bond/ fund

£248 million

£98 million

153%

£153 million

- Equity release

£45 million

£84 million

(46)%

£105 million

Protection**

£209 million

£155 million

35%

£217 million

*Annuities sales can be broken down as Enhanced £78m (2014 Q3: £175m) and traditional fixed term £144m (2014 Q3: £112m). Our one year fixed term annuity product was sold to support consumers in advance of the budget reforms coming into effect. LV= no longer sells this product now that reforms are in force (2014 Q3: £38m).

** The impact of changes in 2014 year end reporting assumptions on Protection Present Value of New Business Premiums (PVNBP) is an increase of £14m for the nine months ended 30 September 2014 and an increase of £20m for the 12 months ended 31 December 2014. If this impact is allowed for the underlying increase in year-on-year Protection sales on a PVNBP basis is 24%.


Richard Rowney, Managing Director LV= Life & Pensions commented: “Our life business continues to perform strongly, with sales up 22% overall. Within the retirement business, we have seen a 19% increase in sales year on year driven by a significant rise in our pension sales and the popularity of our flexible guarantee bond. Since the 2014 Budget, demand for income drawdown solutions has increased and our expertise in this market has enabled us to capitalise on this. We continue to focus on investing and enhancing our proposition to meet the needs of those who want to make the most of the pension freedoms.

“We have witnessed a change in the buying behaviour of those approaching retirement and there has been a notable rise in the number of advisers and clients that are now looking for blended solutions - combining the flexibility of drawdown and the guarantees provided by specialist annuities.

As retirement income specialists we already offered the full suite of retirement income products. Within our blended solutions we are seeing a number of customers choosing our fixed term annuity highlighting the fact that annuities will continue to have a role in helping pension savers structure their income in retirement.

Equity release sales have reduced as expected. They have historically been funded by our enhanced annuity business and this market continues to contract following the pension freedoms. However, we remain fully committed to equity release, we have agreed alternative sources of funding and believe that this remains an attractive market.

“This quarter we entered the Corporate Solutions market, launching LV= Pension Compass - a range of tools designed to make defined benefit pension schemes members aware of their income options at retirement in light of the new freedoms. We also further promoted LV= Retirement Wizard, our online retirement advice service. These propositions have been extremely well received and we have been approached by providers, pension schemes and advisers who are keen to incorporate the Wizard technology into their systems. We are also working with the Government and regulators to demonstrate how low cost automated advice can help close the growing advice gap.

“Our year to date protection sales are up 35% reflecting strong growth in all key business lines. We are the leading provider of individual income protection and we see further growth opportunities in this area. As a further demonstration of our commitment to being easy to do business with, we have joined the UnderwriteMe comparison service in order to speed up the protection buying process.

“We recently launched our business protection proposition which is designed to protect businesses against the financial impacts of death or critical illness of key employees/directors. Our business protection policyholders automatically qualify for LV= Business Care which provides access to a free 24/7 legal advice line, covering areas including HR, contracts and health and safety. We have included this benefit in order to make our business protection even more meaningful for advisers and their clients.

“2015 is proving to be an important year for our life business. These sales figures demonstrate that our growth strategy is gaining traction across the market and we believe that the investments we’re making leave us well positioned to capitalise further as we move into 2016.”


Notes to editors:

LV= employs over 6000 people and serves over 5.7 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.


i) 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.

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