But group operating profit grows by 128%

LV has posted a £202m loss after tax in its annual results for 2008.

The insurer said that the group IFRS loss reflected short-term investment fluctuations, after posting a £50m profit in 2007.

Group operating profit increased by 128% to £62.8m (2007: £27.5m). The company said this was a "significant turnaround" following a loss in 2006.

Gross premiums rose 38% to £917m (2007: £665m) and capital resources fell to £1.1bn (2007 £1.3bn), however it added that "financial strength was retained, with group capital surplus 2.1 times the level required (2007: 1.8 times)."

The company said that the acquisition of Highway Insurance in October 2008 accelerated its ambitions in the general insurance broker channel. Excluding Highway, general insurance premiums grew by 19% from £342.9m in 2007 to £423.5m. It added that the business remains on track to achieve its top five car insurer ambition by 2012.

Mike Rogers, LV Group chief executive, said: “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.”