LV= group post interim results
Mutual insurance group LV=, the UK’s largest friendly society, has announced its interim results for six months ending 30 June 2015.
General Insurance financial highlights:
- Operating profit up 52% to £70 million (H1 2014: £46 million)
- Underwriting profit increased by 152% to £53 million (H1 2014: £21 million)
- Improved combined ratio of 92.1% (H1 2014: 96.9%)
- Premium income up to £729 million (H1 2014: £720 million)
- Pre-tax return on capital of 18.1% (H1 2014: 12.4%)
The general insurance result in the first half of the year is good with profits up by 52% compared to the same period in 2014. GWP is also up for the period and the improved combined ratio of just over 92% is the best ever demonstrating disciplined management of underwriting, claims and costs. This result is partly driven by prior year reserve releases amounting to £55 million (H1 2014: £58 million); LV anticipate however that the prior year run off will be at lower levels during the second half of the year. LV said that it has continued to diversify into non-motor lines with the proportion of non-motor polices now at 37% (H1 2014: 33%).
Both the Direct and Broker channels contributed to the operating profits at £52 million (H1 2014: £29 million) and £18 million (H1 2014: £17 million) respectively. Investment returns at £17 million were lower than for H1 2014 (£25 million) reflecting more challenging investment market conditions.
In Direct LV’s profit is the best achieved for a half year period, as are its record levels of sales of £416 million in the first half of 2015, compared to £408 million in 2014. LV has grown across all business lines in the last quarter and now insure over 600,000 homes.
In Broker LV has seen increased competition in commercial lines and so have managed growth to protect margins. In Broker personal lines the group has achieved a combined ratio of 95% for the six month period by prioritising margin preservation over market share.
Claims costs have benefitted from good weather over the winter months, contributing to strong underwriting results. The motor market remains competitive across both direct and broker but LV has seen some rate recovery during the first half of the year, helping the group to protect margins from increasing personal injury claims costs, which continue to be problematic for the industry.