Friendly society LV= lifts mutual bonus despite dip in profits

Mike Rogers, LV= group chief executive

Mike Rogers, LV= group chief executive - Credit: Archant

Insurance, pensions and investment mutual LV= yesterday reported a fall in pre-tax profits, but said the decline largely reflected less favourable short-term investment fluctuations.

LV=, the UK’s largest friendly society, which includes a major office in Ipswich, posted a bottom-line profit of £37million for the year to December 31, down from £156m for 2013,

Group operating profit fell from £105m to £86m, with an improvement in general insurance, helped by strong underwriting results, being offset by a decline within the firm’s life business, which it said reflected the impact of Budget changes on its retirement business.

However, the LV= with-profits fund earned an investment return of 11.4%, slightly above market benchmarks, and the firm will pay a mutual bonus to its members of £24m, up from £22m in 2013.

LV= added that it had continued to grow customer numbers, from 5.5m in 2013 to 5.7m last year, led by a 180,000 increase in general insurance policies.

Mike Rogers, LV= group chief executive, said: “2014 was an eventfulyear for our members and their society so I am pleased to announce a solid operating profit of £86m and an increased mutual bonus of £24m, meaning we have allocated an extra £86m to members over the past four years.

“Our general insurance business had an excellent year with good profitgrowth despite continued price competition and strong increases in our home and commercial customer bases as we delivered on our diversification strategy.

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“Our protection, equity release, and heritage businesses had a good year helping to partially offset the significant impact of the 2014 Budget on our retirement new business profits as annuity volumes fell and we invested in new propositions.

“We believe that our existing expertise in enhanced annuities, pension drawdown, and equity release, coupled with our status as Britain’s most recommended insurer will enable us to compete strongly in the new retirement landscape.

“Finally our with-profits fund recorded another strong investment performance, benefiting many of our members.”