L&G acquisition offers ‘really good opportunities for future growth’ says LV=GI boss

LV= General Insurance’s (LV=GI) acquisition of L&G General Insurance in January 2020 presents a “really good opportunities for future growth”, particularly within “the intermediary channel”, said Steve Treloar, chief executive of LV=GI.

Speaking to trade journalists following the publication of Allianz Holdings’s 2020 full year results, of which LV=GI is a part, Treloar said “it was very nice to report that we have now started transferring business from L&G to LV= Broker. That started towards the back end of 2020 and continues to be progressing in line with our plans.”

For Treloar, “L&G offers us some new opportunities, two of which I think are really good opportunities for future growth”.

One such opportunity is around expanding and broadening LV=GI’s business through intermediary channels, “where previously we’ve not really had a presence”.

Secondly, LV=GI plans to make use of L&G’s Smart Quote technology, “which is a significantly reduced question set and one which I think affords us some very interesting opportunities in the home insurance space as we look forward into 2021 and beyond”.

“There’s some quite exciting stuff there,” Treloar added.

The acquisition of L&G General Insurance weighed heavily into LV=GI’s financial results for 2020 – the deal boosted the firm’s gross written premium (GWP) by 30% between 2019 and 2020, while operating profit improved by 126%.

Broker focus

The LV= Broker business itself also enjoyed a “very strong performance” in 2020 with revenue increasing by 15.6%, from £499m in 2019 to £577m in 2020, excluding L&G General Insurance.

Furthermore, it received the Institute of Customer Service (ICS) “service mark accreditation, which has also been a fantastic recognition of the improved service levels that we’re seeing through the LV= Broker business”, Treloar added.

Focusing on brokers, Treloar continued that LV=GI launched its new broker portal in 2020, which has been “been very well received”.

He said: “It’s using new and up to date technology and provides for a more seamless service for the broker.

“One of our key tenets that we’re trying to focus on with the broker is to remove the friction between us. So, the more straight-through processing that we can deliver to a broker, the better the experience for the customer, the broker and ultimately for us too.”

Profitability drivers

Speaking on profitability and financial performance, Treload added that “we’ve seen improvements across all of our main lines there in home, in motor and in specialist lines and I guess in particular, worthy of note is that some of our specialism have really been paying off. We remain number one in motor homes, in driving schools and number two in motorbikes. And those are businesses that have all performed strongly during the course of 2020”.

For Treloar, there have been three key drivers behind LV=GI’s profitability in 2020.

First is the business’s focus on efficiency, which has been a four to five year journey so far. Centred around digitalisation, an investment in machine learning capabilities and a “systems thinking” approach that builds on “what matters to the customer”, Treloar noted that the firm’s efficiency improved by 6% in 2020.

Other drivers of profitability include “an absence of very big weather events on the domestic property side” and “the impact of Covid on car claims frequency being down during the course of the year, also giving us an improvement in profit too”.

Treloar described it as a “pleasure” to be able “to report a set of numbers that I think reinforced the strategy that we have been following. And that’s a strategy that focuses on delivering excellent service and great products to our customers and I think this year’s results really are testament to the robustness of that approach”.

Forward thinking

For 2021, Treloar pinpointed two key considerations for personal lines insurers.

He explained: “The first one is really what happens from a Covid perspective and I think we’re undeniably linked there to the performance of the UK economy and the pace with which the government reduces the lockdown restrictions.

“And then secondly, the FCA market pricing study will be a significant change event for us across the market as we look into the remainder of 2021 and possibly into 2022.

“I suspect these are pretty big events that [are] still to be played out in the course of the coming year.”