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LV= makes £49m loss after pensions freedoms hit

LV= made a group loss before tax of £49m in 2016 as the mutual was beset by losses coming from pension freedoms.

The company made a profit of £124m the previous year.

By contrast the mutual’s life and pensions arm profits slightly increased in 2016, from £41m to £45m.

The mutual’s heritage businesses, made up of closed books of business in run-off, made an operating loss of £35m, compared to an £88m profit in 2015.

LV= says this loss was “driven by model and valuation changes and adverse claims experience reflecting changes in the basis used to calculate the amount payable when a policyholder takes the proceeds from the policy as cash rather than as an annuity as a result of the volatility following the changes to pensions freedoms.”

LV= group chief executive Richard Rowney (pictured) says: “Against the wider challenging backdrop of a sustained low interest rate environment, increased capital requirements resulting from the transition to Solvency II and the continued impact of claims inflation, I am reassured that the business is moving in the right direction.”

Last month Money Marketing reported LV= had held talks to secure a merger with Royal London amid a backdrop of tougher capital requirements.

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