Life, pensions and investments business LV= has become the latest to announce its financial results for the year ended December 31, 2020, a busy year for the business which saw its sale to Bain Capital Credit. 2020 also witnessed the business increase its market share for the first time since 2016 while its operating profit rose to £40 million, up from a loss of £16 million in 2019. Its profit before tax from continuing operations rose to £37 million in 2020 from £15 million in the previous year.
Meanwhile, LV=’s new business PVNBP fell slightly to £1.3 billion from £1.4 billion and the company saw a fall in trading profit across its savings and retirement, protection and heritage businesses. Commenting on the results, CEO of LV= Mark Hartigan noted that the business delivered a good financial performance and created strong momentum.
“We are reporting a strong Solvency II capital surplus of £690 million and an increased operating profit of £40 million,” he said. “I am pleased that we have again been able to share some of the financial benefits with our with-profits members through the allocation of a £28 million mutual bonus. This has been applied by uplifting the asset share of relevant with-profits policies by up to 1%.”
He paid tribute to the staff at LV= for their flexibility and noted that over the year the business increased its NPS among financial advisors as well as completing a significant change agenda and delivering several initiatives that helped improve its trading performance.
LV=’s operating capital generation of £103 million was up slightly from 2019’s £101 million and included £58 million from its trading businesses, down from 2019’s £87 million The Solvency II capital surplus decreased by £254 million to £690 million, reducing its CCR to 198% from 2019’s 244%, though this level remains at the top of its risk appetite range of 140% - 200%.
LV= noted that during its board review of its strategic objectives and long-term plans, it was established that to remain competitive LV= requires long-term access to capital for investment. Discussing the transaction with Bain Capital Credit, LV= noted that the board was unanimous in its decision to pursue the deal which, subject to member and regulatory agreement, is expected to complete by the end of March 2022.
“Success in 2021 will be determined by three simple objectives,” Hartigan concluded, “to deliver the transaction with Bain Capital Credit, to hit our trading targets and to continue to reduce the complexity of our business and improve efficiency. With the backing of Bain Capital Credit, the board is excited by the opportunities for LV= to develop as a major force in the UK life insurance market for the benefit of our customers, people and partners.”
