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Investment falls see LV= profits slump 76%

LV=’s pre-tax profits fell 76 per cent from £105m in 2013 to £37m last year, which it says is due to “short-term investment fluctuations”.

The provider’s annual results, published today, show short-term investments brought in £105m in 2013. But this turned to a £2m loss in 2014, which LV= says has been driven by “the significant fall in yields in the last quarter and the widening of credit spreads.”

Finance costs also grew, from £15m in 2013 to £24m in 2014, as a result of a full-year interest payment on subordinated debt issued in May 2013.

The impact of the Budget on annuity sales saw the life business’s £18m profit in 2013 turn into a £11m loss in 2014.

Annuity sales, measured on a present value of new business premiums basis, fell 15 per cent from £457m to £387m. But pension sales grew 8 per cent to £636m, up from £587m in 2013.

Members will receive a share of a toal mutual bonus of £24m.

LV= group chief executive Michael Rogers says: “Whilst we are excited about the potential going forwards, we saw significantly lower new business volumes and profit contribution from enhanced annuities as customer behaviours started to change and retirees deferred making decisions until changes come into force in April.

“The impact on enhanced annuities was however partially offset by strong performance in other business lines, particularly equity release and protection.”

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