Most insurance companies released their six-month results for the period ending June 30, 2017 during the month of August. LV=
however, has announced its results this morning – and they’ve certainly proven to be worth the wait.
The company has revealed an eye-catching headline figure of a 58% profit surge on the back of a strong performance across its core businesses.
The UK mutual insurer, retirement and investment group, which recently announced a strategic partnership with Allianz to create the UK’s third largest personal insurer
, stated that its profitable growth reflected improved efficiency and strong underwriting discipline across general insurance, as well as the success of its strategy to save £40 million across the group by 2018.
“A strategic cost reduction programme targeting over £40 million of real cost savings by the end of 2018 was initiated this year, the early results of which are evidenced by the reduction in gross expenses by £12 million to £200 million (HY 2016: £212 million). Savings have largely been achieved through strong day-to-day cost management discipline and an ongoing review of discretionary spend,” commented Andy Parsons, LV=
group finance director. “Management continues to focus on underlying trading cost control.”
Among the financial highlights were that operating profit from trading operations climbed 58% to stand at £82 million, while general insurance gross written premiums were up 4% to £817 million. This led to general insurance operating profits climbing by 123% to £49 million compared to £22 million during the same period last year. The combined operating ratio improved to 93.6% from 98.5%.
“Over the last two years we have invested over £80 million in improving our core systems and developing new digital propositions such as our robo-advice service, Retirement Wizard,” explained Richard Rowney, LV=
group chief executive. “Our continued investment in digital initiatives is enabling us to both reduce costs and improve productivity.
“Since I took over as chief executive in July last year, improving the capital position of the Group has been my number one priority. Throughout the first six months of 2017 we have continued to take actions in this area and our capital coverage ratio has increased further to 153% with a further substantial improvement anticipated on completion of the Allianz
Details were also revealed about the structure of its deal with Allianz
. The German giant will pay LV=
an initial £500 million in exchange for a 49% stake in LV=
’s General Insurance businesses. LV=
will acquire Allianz
’s personal home and motor insurer’s renewal rights while AIlianz will obtain LV=
’s commercial insurer’s renewal rights. Then, in 2019, Allianz
will pay £213 million for a further 20.9% stake in the general insurance business through an agreed, forward purchase based on a total valuation of £1.020 billion for 100% of the business.
MD lifts the lid on partnership with Allianz