View more on these topics

LV= life and pensions profit slumps 36% as annuity margins drop

Life and pensions business at LV= has been sharply hit by the impact of the Budget reforms, with underlying profit falling by 36 per cent, the firm’s interim half results show.

Underlying profit within the life and pensions division dropped from £11m in the first half of 2013 to £7m this year. LV= says this was primarily due to a drop in profits on enhanced annuity sales and increased sales of less profitable fixed-term annuities.

LV= also reported a 47 per cent drop in year-on-year pre-tax profits for the group, from £88m in the first half of 2013 to £47m this year. Group operating profit was up 18 per cent, to £39m.

“The reduced profit has primarily been driven by reducing margins on new business following the changes to pension freedom announced in the Budget in March,” LV= says. “As well as taking positive actions to help our customers immediately impacted by the Budget, we also quickly implemented some consumer focused initiatives including the launch of a new one year annuity and a new simplified drawdown product.”

Despite the fall in profits, there was an 11 per cent increase in retirement product sales, from £510m to £566m. With-profit sales hit £70m in the six months to June, up from £44m in the same period last year.

LV= group chief executive Mike Rogers says: “A degree of uncertainty will remain for our retirement solutions business until more clarity is provided on the new pensions landscape, however we are supportive of the Government’s decision to ensure that guidance offered to all retirees is provided independently as we believe this will help ensure the right consumer outcomes.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com