Whilst it has been widely reported on the exciting new website from LV car insurance, by contrast it has been reported that whilst the company has reported a sharp increase in operating profit, in line with many other insurers, investment losses have dragged the results down.
The group reported a 128% increase in operating profits, to £62.8m (2007: £27.5m), and a 38% increase in gross premiums to £917m (2007: £665m).
However, LV’s investments contributed to a loss after tax of £202m (2007: profit £50m). It maintained a capital surplus of £1.1bn, 2.1 times the level required (2007: £1.3bn).
The mutual emphasised its long term business management, reporting that policyholders with a 25 year with-profits policy maturing in February 2009 were at least 22% better off than equivalent policyholders with major proprietary companies.
The average value of a maturing LV 25 year with-profits policy fell 1.2% year-on-year, despite a 32% fall in the FTSE All Share in 2008.
LV also said that it had strong growth in member numbers, up to 1.13 million at the year end (2007: 937,000). Additionally, LV’s general insurance (GI) premiums grew by 19% from £342.9m in 2007 to £423.5m, excluding acquired business Highway Insurance.
Mike Rogers, LV group chief executive, commented: “Throughout a turbulent year our single-minded focus on helping our members and customers to look after what they love has held us in good stead. The very strong growth in operating profit reflects significant progress over the last two years in re-shaping our business portfolio and strengthening our organisational capabilities. This was underpinned by strong sales growth across our GI and retirement solutions businesses, and by our withdrawal from banking.
“Our focus on high quality, long-term investments has allowed us to maintain our relatively strong investment performance and financial strength, despite very volatile short-term markets. In particular we have had no direct exposure to failing Icelandic banks, nor to the sub-prime mortgage market.
“Trading has started well in 2009, with sales in the first two months strongly ahead of the same period last year, although investment markets remained volatile.”