Operating profit improvement also benefited from prior-year reserve releases of £113m
LV=’s general insurance business made a profit before tax of £89m in 2014, up 15.6% on the £77m it made in 2013.
Its operating profit also rose, by 14% to £92m, (2013: £81m).
Underwriting profit grew by 240% to £51m (2013: £15m), while the insurer achieved its lowest reported combined operating rating ratio (COR) of 96.1% (2013: 98.9%), an improvement of 2.8 percentage points.
The improvements were despite the general insurance premium income falling by 4% to £1.39bn due to falling rates in motor (2013: £1.45 billion)
The insurer added that the improvement in operating profit was partly driven by the underwriting result, which has benefited from prior-year reserve releases of £113m (2013: £41m).
The insurer said: “LV=’s general insurance business continues to achieve excellent results and good profits despite continued depressed motor premiums and low investment returns over the year.
“The operating profit of £92 million is up 14% year-on-year and we have grown our business by over 180,000 new policies during 2014.
“The combined ratio of 96.1% is the lowest ever reported and demonstrates disciplined underwriting, claims and cost management.”
Business diversification
Personal motor insurance remains the insurer’s largest business.
But LV= says it has continued to see growth in other product lines as part of its plans to diversify the business into other product lines, particularly home and SME.
Home premium income increased by17% to £182 million in the year and commercial premium grew by 13% to £227 million.
In motor, the insurer saw a slight fall in overall motor premiums in 2014.
LV= said the main cause for the drop was because it had prioritised achieving underwriting margins, rather than growing market share.
The insurer says rates have been rising and it expects this to continue in 2015.
The two core businesses of direct and broker now underwrite 3.2 million and 1.4 million policies respectively, and both businesses contributed to the profits at £46 million each.
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