The mutual insurer posts improved results ahead of implementation of Allianz joint venture

LV= said strong underwriting discipline boosted its general insurance operating profit to £121m in 2017.

That compared with a prior year loss of £26m, which was hit by the impact of the Ogden rate cut. Without the Ogden effect, 2016 would have reported an operating profit of £113m.

Gross written premiums were stable at £1.60bn against £1.58bn.

LV= pointed to improved efficiency across the business, including the implementation of a new quote, buy and policy administration system in general insurance and the rollout of a new quote and apply system in protection.

 LV= General InsuranceFY 2017FY 2016 Pre-OgdenChange (%)FY 2016 Post Ogden

Gross written premiums

£1.60 billion

£1.58 billion


£1.58 billion

Underwriting profit/(loss)

£103 million

£70 million


£(69) million

Operating profit/(loss)

£121 million

£113 million


£(26) million

Combined ratio





The group as a whole, incuding its life and investment businesses, reported a pretax profit of £122m against a loss of £49m.

These results are the last before the implementation of LV=’s joint venture with Allianz. Last August, the companies announced that Allianz’s personal home and motor portfolios will transfer to LV=GI, the new joint venture 49% owned by Allianz and 51% owned by LV=. Moving the other way, LV=’s commercial portfolios will transfer to Allianz.

“2017 has been a transformative year for LV= and I am very proud of what we have achieved,” said LV= chief executive Richard Rowney.

At a group level, he said the benefit of the sale of the commercial renewal rights to Allianz was partly offset by a change on the life business’s valuation basis.

Andy Parsons, LV= group finance director, said the General insurance result benefited from improved rates and favourable claims experience.

“Encouragingly this result, which included £103m of underwriting profit, has been achieved while strengthening reserves against future shocks such as the change to the Ogden rate experienced in March 2017 and also with less reliance on prior year releases.”

Prior year releases were £46m, down £8m compared to 2016.

The combined ratio improved to 91.8% from 94.1% pre-Ogden, and 105.8% after the effect of the Ogden rate cut.

Parsons said the improvement in general insurance was partly offset by an increase in the cost to repair vehicles and higher expected settlements for severe injuries as a result of Ogden. The business also benefited from a reduction in claims frequency, driven in part by the absence of large catastrophe events in the UK.

Direct business continued to grow in both car and home insurance due to strong sales and market leading retention levels, he said. Direct premiums grew by 5% to £960m and total policies increased by 3% to 3.7 million.

Broker business showed an improved operating profit of £30m.

“We have reshaped our distribution mix by reducing our exposure to purely aggregator business and widening our reach through key partnerships with motor manufacturers, retail brands and digital channels,” he said.

Parsons renewed LV=’s pledge to pass on all savings from the forthcoming review of the Ogden rate.

“But, until such time, we will continue to appropriately reserve based on the current rate,” he said.