UK insurer LV= has seen a sharp fall in profits following the personal injury discount rate reduction, financial results announced this morning reveal.

LV=’s operating profits from trading operations were slashed from £159 million pre-Ogden to £20 million post-Ogden, in what the group’s chief executive, Richard Rowney, called a “significant one-off impact” from the rate change.

The Group reported a pre-tax loss of £49 million in 2016, compared to a £124 million profit in 2015, however sales in both general insurance and life and pensions increased.

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“The reduction in the Ogden discount rate has had a significant one-off impact on the Group’s financial results as we have increased our reserves by £139 million to reflect higher claims costs,” Rowney said.

“We’ve long argued that the methodology used to set the new rate is obsolete and will work with the Government to ensure a fair outcome for all and that car insurance premiums aren’t unjustly hit.”

Rowney said he was reassured that the business was moving in the right direction, despite a wider challenging backdrop of a sustained low interest rate environment, increased capital requirements as a result of the transition to Solvency II, and the continued impact of claims inflation.

The results for the year ending December 31, 2016 show that gross written premiums increased to £1.58 billion, with growth in both the direct and broker businesses.

Net premiums increased 16% to £2.2 billion, compared to £1.9 billion in 2015, and pre-Ogden underwriting profit, at £70 million, was up 59% on the previous year.