Mutual insurance, investment and pensions group LV= has announced strong new business results for the six months ending 30 June 2009.
Life & Pensions
Life and Pensions total Annual Premium Equivalent (APE) was up 14% to £45.2m (H1 2008: £39.7m). This includes:
- Retirement business APE £35.4m (H1 2008: £28.8m)
- Savings & Protection APE £9.8m (H1 2008: £10.9m)
General Insurance
Overall insurance sales (Gross Written Premiums) up 92% to £397.5m (H1 2008: £206.5m), this includes:
- New business GWP of general insurance products up by 61% to £106.9m (H1 2008: £66.6m) excluding Highway Insurance contribution (acquisition of Highway completed October 2008).
- Direct business including aggregator increased to £61.3m (H1 2008: £47.4m).
- Broker business up to £192.4m (H1 2008: £19.2m) and up 137% excluding Highway contribution.
Asset Management (LVAM)
- Total assets under management steady at £7bn at the half year (£7bn at 31 December 2008). Run-off from the legacy life book offset by market appreciation and LVAM sales.
- Net new fund inflows of £213m in H1 2009.
- LV= Managed Portfolios (primary proposition for IFA sales) accounted for 38% of net new fund inflows in H1 2009, despite being launched only at the end of July 2008.
- Despite a volatile market environment, overall investment performance has remained robust both for the traditional with-profits portfolio, which is ahead of benchmark, and the more recently launched OEIC investment funds, many of which are performing above their peer group average.
Mike Rogers, LV= Group Chief Executive, comments: “Despite a difficult environment, our focus on attractive markets and helping customers to look after what they love has served us well. As a consequence, trading in the first half of 2009 was strong, with both sales and operating profits well up on the previous year.
“In our life business, excellent cost control more than offset subdued market volumes for protection sales. Our retirement business continued to grow market share across the pension consolidation, enhanced annuity and equity release markets, although pension volumes were impacted by market volatility and proposed taxation changes.
“Our general insurance business, benefiting from the integration of Highway Insurance, managed to more than offset exceptionally low investment returns through strong sales, rate increases, and improved underwriting performance.
“In asset management there have been strong in-flows of funds from our life and general insurance franchises, and the business has also started to gain traction in the external market. Relative to benchmarks our investment performance was strong.
“There seems little reason to believe that market conditions in the second half of 2009 will be any more favourable. However our momentum and competitive positioning mean that we expect sales to continue to trend higher, and costs to remain well contained.”
Notes
APE = Annual Premium Equivalent
This is a measure comprising new regular premium sales plus 10 per cent of single premiums.
GWP = Gross Written Premiums
These represent the revenue (premiums) expected to be received over the life of the insurance contract.
OEIC = Open Ended Investment Company
OEICs are hybrid investment funds that have some of the features of an investment trust and some of a unit trust. Like investment trusts, OEICs are companies that issue shares on the London Stock Exchange, and which use the money raised from shareholders to invest in other companies. Unlike investment trusts, they are open-ended which means that when demand for the shares rises the manager just issues more shares.
With an investment trust, if demand exceeds supply, the response may be a rise in the share price. The price of OEIC shares is determined rather differently. More like a unit trust, in fact, with the key factor being the value of the underlying assets of the fund. But in contrast to unit trusts, there is no bid/offer spread with OEICs, so the price of the shares should be the same whether you are buying or selling.
