Drawdown pushes LV= pensions business into profit

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LV=’s life and pensions business has turned from a £7m operating loss in 2014 to a £41m profit in 2015.

According to the mutual’s full year results, published today, the life and pensions division went into operating profit driven by a 26 per cent rise in pension sales, which includes drawdown, from £636m to £801m in 2015.

LV= says the turnaround was “partly as a result of favourable one-off model and valuation changes”.

While annuities and equity release sales, on a PVNPB basis, fell by 20 and 40 per cent respectively, flexible guarantee bonds were up 148 per cent, from £153m to £379m.

In addition, protection sales were up by a quarter, from £217m to £272m.

Across the LV= group, operating profits increased 127 per cent from £86m to £195m in 2015. Pre-tax profit rose from £37m to £124m.

Eligible members will receive a mutual bonus of £27m, up from £24m.

LV= launched one of the first robo-advice services – Retirement Wizard – in 2015. It says there has been “significant rise” in interest from firms who want to white label the technology and expects to announce new partnerships in 2016.

LV= group chief executive Mike Rogers says: “The challenging market conditions experienced in 2014 with depressed investment returns and pressure on home insurance rates, have continued in 2015.  Against this backdrop LV= has performed very strongly and delivered an operating profit of £195 million, an increase of 127% over the prior-year.”

He adds: “The impact of government pensions’ reforms continues to be felt in the retirement market where we’ve seen a marked change in buying behaviour with more pensions savers shopping around for retirement income solutions.  New business volumes have grown significantly and we continue to develop new products and services to position LV= at the forefront of the changing pensions environment.”