LV= has seen profits from its protection business soar 350% year-on-year, according to the group’s financial results for the year to 31 December 2021.
The results reveal trading profit from LV=’s protection business rose from £2m in 2020 to £9m in 2021 in a year in which the group made further enhancements to its flagship income protection proposition. This involved launching mortgage and rent cover for those with fluctuating incomes, as well as regular earners and a new executive income protection product enabling small businesses to pay sick pay benefits to key employees.
New business sales from protection were also up 32% from £252m in 2020 to £332m in 2021.
Savings and retirement trading profit rose 175% from £8m to £22m, while new business sales from this division rose 21% from £1.04bn to £1.26bn.
The group described the overall underlying performance of the business as strong with trading profit increasing to £29m (2020: £9m), driven by the significantly improved trading profit generated by new business of £17m (2020: £6m loss).
However, the group saw operating profit decline 22% from £40m in 2020 to £31m in 2021 and reported a loss before tax and mutual/exit bonus for the year of £66m (2020: £37m profit). LV= attributed the decline mainly to interest rate swaps hedging its Solvency II capital position.
Commenting on the group’s performance, Mark Hartigan, chief executive at LV=, said: “LV= has outperformed both our new business volumes and profitability targets with significant growth in sales and trading profit.
“Thanks to the progress of our plan to transform the business we start 2022 well capitalised and clear in our future plans.
“We look forward with confidence to a sustainable future for LV= as part of a vibrant mutual sector.”
Hartigan added that the mutual has also concentrated on refocusing the business to serve “mass affluent customers” providing financial resilience for families.
“This is built around access to low volatility smoothed investment solutions supported by income protection & critical illness propositions and the ability to access housing wealth via our equity release offering. We still have more to do, but our plan is working.”
Touching on Bain Capital’s failed bid to acquire LV=, Hartigan added: “The proposed transaction with Bain Capital was put to a member vote at a Special General Meeting in December 2021 but was not approved by members. Since the vote we have listened to our members. It’s clear they value stability and security for their policies above all else and are supportive of an independent future for LV=.
“I would like to thank all of our people who have worked so hard to support our customers and advisers over the last twelve months. LV= is a great business and we’re determined to build a successful future.”