LV= profit up 54% as investment return bolsters results

LV= General Insurance has recorded an operating profit of £117m, up 54% on the £76m it made in 2011.

The insurer’s combined operating ratio increased by two percentage points to 99.7% (2011: 97.7%), with underwriting profits of £5m, down from £30m in 2011. The company attributed the fall to claims arising from adverse weather conditions and an increase in personal injury claims frequency.

Operating profit was significantly boosted by strong investment return, producing a total return of 5.8% (2011: 2.8%) owing to an uplift in the markets in 2012.

Gross written premiums grew by 2% overall, with significant rises in direct business. In-force car insurance policies increased by 17% to 1.78 million. Gross premiums written in car insurance rose by 15% to £662 million. Within home insurance, the direct business grew by 6% to 529,000 in-force policies.

The broker business achieved strong growth in commercial lines, with SME premium income increasing by 40% to £75m and commercial motor up 1% to £85m.

Personal lines motor sales were down 16% to £481m in broker business.

LV= general insurance managing director John O’Roarke said: “An increase in profits of more than 50% is an excellent result for 2012 and represents our fifth successive year of growth in both profitability and premium income. Our direct business continues to go from strength to strength benefiting from good growth in new business sales and excellent customer retention. In our broker business, the highlight has been a 40% increase in SME premium income and increasing recognition of us by brokers as a trusted and proactive player in this market.”

LV= group chief executive Mike Rogers added: “Our general insurance business continues on its upwards trajectory and I am delighted to be reporting another year of consistent growth in profitability. For the first time the GI companies returned capital to the group amounting to £38 million.”