LV= enters new phase as profits double

Profit before tax at LV=’s general insurance division doubled to £70m in 2011 from £35m in 2010.

The result was driven by an improvement in underwriting performance. The combined ratio swung to a profitable 97.7% in 2011 from an unprofitable 104.2%.

Meanwhile, LV=’s investment return slumped to 2.8% (2010: 5.7%) amid volatility and uncertainty in the capital markets.

Gross written premiums jumped 23% to £1.5bn (2010: £1.2bn).

“This is a very strong set of results in an extraordinarily challenging year,” LV=’s managing director of general insurance, John O’Roarke, said in a statement. “For the fourth year in a row, we have managed to combine top-line growth with strong bottom-line improvements. The commitment and energy of everyone in our business has made this possible and it’s a great privilege to be working with them.”

In the motor book. a reduction in the frequency of car accidents was offset by a further increase in personal injury claims and attempted fraud. LV= said it has adopted a proactive claims management strategy, settling valid claims as quickly as possible while adopting a “rigorous and challenging” approach to fraudsters.

Written premiums in LV=s broker channel increased by 9.6% to £720m. Within the broker channel personal lines motor GWP was up 4.7% to £572m.

Broker commercial lines business premiums increased 29% to £138m. Within broker commercial, SME premium income was up 27% to £54m and commercial motor grew 30% to £84m.

In the direct motor business, the number of in-force policies grew by 36% to 1.52 million and gross written premium increased 53% to £578m.

“LV= has gone though a significant period of transition and we are now moving onto the next stage,” O’Roarke said. “Our focus for 2012 and beyond will be on increased profitability along with steady growth.”

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