LV= has reported operating profit of £136 million for 2018, up £2m on the previous year.
This includes £60 million from life and £107 million from general insurance, partially offset by strategic investment and group items of £31 million.
The insurer said profit before tax was hit by deteriorating financial markets in 2018 leading to a significantly reduced profit of £20 million, down from £122 million in 2017.
Richard Rowney, LV= group chief executive, said: “Following the actions taken in 2017 to strengthen our capital position, 2018 has been all about putting the foundations in place from which to build a sustainable future as a focused, independent Life & Pensions business.
“Our capital position continues to be strong and our Capital Coverage Ratio stands at a healthy 172% with positive contributions from both trading businesses. At this level it is well within our risk appetite and maintaining this relative position will continue to be an area of management focus in the future.
“Our General Insurance strategic partnership with Allianz which came into effect at the start of 2018 is working well. We will complete the process of transferring the renewal rights for Allianz personal lines business to LV= in May and remain on track to complete the operational separation of the General Insurance business ahead of plan.”
Andy Parsons, LV= group finance director, said: “During 2018 we focused on reducing our cost base to prepare for the future as an independent Life & Pensions business once we exit from the agreement to provide transitional support services to the General Insurance business. This focus has resulted in a further £19 million decrease in Group operating costs. We will continue to exercise rigorous cost control in the future.
“Operating profit from Life is flat year-on-year as the reduction in new business contribution of £18 million is offset by strong cost control and an improved performance in Heritage which was impacted by legacy portfolio review actions in 2017. Operating profit from the General Insurance business of £107 million (2017: £120 million) includes an underwriting result of £99 million (2017: £102 million) and investment returns of £8 million (2017: £18 million). The reduction in underwriting result is primarily due to adverse current year claims experience, offset by favourable prior year run off of £106 million (2017: £46 million).”
Trading conditions for LV= life businesses were “tough” in 2018, the insurer said. While it delivered an operating profit of £60 million, new business sales were down 13% at £1.8 billion.
Protection sales were adversely impacted by a combination of increased competition, lower volumes in the first half of the year and the closure of certain niche product lines in 2017.
In retirement, LV= saw strong growth in equity release, up 77% to £211 million and annuities up 16% to £137 million.