TIDM51II
RNS Number : 7520U
LV=
30 March 2023
LV= ANNOUNCES 2022 FINANCIAL RESULTS
- Continued positive momentum despite challenging economic
conditions -
Protection, investment and retirement specialist LV= announces
its financial results for the year to 31 December 2022 and
publishes its Annual Report (LV.com/annual-report).
Operational highlights:
-- Year-on-year sales of annuities (+91%), equity release
(+19%), and protection products (+8%) increased and exceeded sales
targets
-- Continued progress on stabilising operational costs with
expenses remaining largely flat despite a backdrop of high
inflation
-- Strengthened senior leadership with appointment of David
Hynam as LV= Chief Executive and Simon Moore as LV= Board Chair
-- Two funds - Extra Cautious and Impact Growth - added to the
LV= Smoothed Managed Fund range broadening appeal to a wider range
of investors
-- Launched further affordable critical illness cover - LV= Life and Critical Illness Cover
-- Mortgage Advice Bureau added the full LV= Flexible Protection
Plan range of products and options to its protection panel
-- A one-off payment of GBP750 made to help LV= colleagues with the cost of living crisis
Financial highlights:
--
* Present value of new business premiums (PVNBP) GBP1.5
billion (FY 2021: GBP1.6 billion)
* Operating profit remains stable year-on-year at GBP31
million (FY 2021: GBP31 million)
* Trading Profit GBP28 million (2021: GBP29 million)
--
* GBP35 million of bonuses shared with eligible members
--
* Solvency II operating capital generation GBP91
million(i) (FY 2021: GBP110 million)
--
* Group Solvency II Capital Coverage Ratio 174%(ii) (FY
2021: 187%)
David Hynam, LV= Chief Executive, said:
"There's no doubt that the current economic challenges and
uncertainty are affecting businesses around the UK. High inflation,
rising interest rates and low growth are posing challenges for
businesses and consumers alike. We are not immune to this and we
know that our members will be no less affected, not least by the
rising cost of living. Despite these challenges, and as a result of
our focused business strategy, the outlook for LV= remains
positive.
"Despite difficult market conditions, we have traded well with
our protection, equity release and annuities products all exceeding
their 2021 sales levels.
"Since joining LV=, I've been focused on driving forward the
next steps in our business strategy.
"My goal is to forge a collaborative, inclusive business
environment where we do all we can to achieve the best outcomes and
returns for our mutual members.
"We are already delivering on our members-first philosophy,
having shared member bonuses of GBP35 million.
"Our products also reflect LV's values-driven approach, with our
protection policies - critical illness, income protection and life
insurance - helping individuals and families across the nation
guard against serious accidents or illnesses that prevent them from
working.
"We have expanded our range of protection products including
launching a more affordable critical illness product providing more
choice and flexibility for customers at different life stages.
"Our pensions and equity release products are helping members
secure the retirement they want, and our Smoothed Managed Fund
range remains popular with financial advisers and their clients who
are looking for a range of lower-volatility investments. Sales of
the Smoothed Managed Fund range have been affected by difficult
economic conditions but net fund flows are broadly neutral.
"We added two funds last year. The new funds - Extra Cautious
and Impact Growth - broaden the LV= Smoothed Managed Fund range to
appeal to a wider range of investors. The Smoothed Managed Fund
range will continue to be a core product and play an important role
in helping to secure opportunities that extend LV's distribution
reach.
"The business continues to have strong foundations, and despite
increasing inflationary pressures, we have maintained tight and
largely flat operating costs.
"LV= members can be confident that we are doing our utmost to
deliver the value for money they rightly expect in tough economic
times."
Financial highlights:
FY2022 FY2021 Change (%)
Operating profit GBP31 million GBP31 million (0%)
------------------- ------------------- -----------
Trading profit GBP28 million GBP29 million (3%)
Savings and Retirement GBP10 million GBP22 million (55)%
Protection GBP19 million GBP9 million 111%
GBP(1) million GBP(2) million
Heritage loss loss 50%
------------------- ------------------- -----------
New business sales (PVNBP
basis) GBP1,454 million GBP1,589 million (8%)
Savings and Retirement GBP1,097 million GBP1,257 million (13%)
Protection GBP357 million GBP332 million 8%
------------------- ------------------- -----------
New business sales on a Present Value of New Business Premiums
(PVNBP) basis decreased by 8% to GBP1,454m (2021: GBP1,589m). Sales
of annuities, equity release and protection products increased but
sales of Smoothed Managed Funds (SMF) and other pensions products
have fallen due to difficult economic conditions. However, net fund
flows into the SMF range of funds remain broadly neutral.The
business has been impacted by the reduction in SMF and pension new
business sales, although this has been mainly offset by increased
sales across our other products, leading to trading profit
decreasing slightly to GBP28m (2021: GBP29m). Trading profit
generated by new business fell to GBP14m (2021: GBP17m), while the
trading profit generated from in-force business increased to GBP14m
(2021: GBP12m). Operating profit is stable year-on-year at GBP31m
(2021: GBP31m), with the impact of reduced trading profit largely
offset by beneficial model and basis changes and other items.
2022 saw a continuation of the strong cost disciplines embedded
within the business with targeted operating expenses remaining flat
at GBP105m (2021: GBP105m), despite a backdrop of high inflation.
This allowed the business to make a one-off payment of GBP750 in
order to help LV= colleagues with the cost of living crisis.
Non-operational items, such as strategic investment and business
restructuring costs have reduced to GBP80m (2021: GBP90m) and the
overall year-on-year result before economic impacts has therefore
improved. Control of non-operational spending was stated as a key
area of focus in last year's Annual Report and provides another
example of management's commitment to embedding strong cost
disciplines within the business.
As a mutual, we do not consider the International Financial
Reporting Standards (IFRS) results to be a key metric for our
members, we therefore manage the business primarily on a Solvency
II basis. Despite the economic and market turmoil, our Solvency II
capital position remains strong, with a capital surplus of
GBP391m(iii) (2021: GBP637m) and a Capital Coverage Ratio of 174%
(2021: 187%), well within our risk appetite range of 140% - 200%.
Operating capital generation of GBP91m (2021: GBP110m) includes
GBP89m (2021: GBP87m) from our trading businesses.
The GBP246m decrease in capital surplus during the year is
mainly driven by economic fluctuations. As well as impacting the
value of the pension scheme and fund used to pay discretionary
bonuses to eligible with-profits members, these have also
restricted the capital benefits associated with our subordinated
debt and deferred tax assets. This leaves our solvency position
less reliant on lower-quality regulatory capital. IFRS results have
also been impacted by external economic fluctuations, leading to a
loss before tax and member bonuses of GBP265m (2021: GBP66m).
Despite the market volatility and economic turbulence, our
Savings and Retirement business has proved resilient. New business
sales totalled GBP1,097m (2021: GBP1,257m) on a PVNBP basis.
Profitability of new business has been impacted by the reduction in
SMF and pension new business sales with the trading profit
generated by Savings and Retirement new business decreasing to
GBPnil compared to a new business trading profit of GBP12m in
2021.
We continue to develop our Smoothed Managed Funds franchise,
which offers clients protection from market volatility while
facilitating access to potential growth upside. Throughout the year
we made a number of enhancements including adding two funds to the
SMF range and overall inflows totalled GBP280m.
Our Protection business has continued to grow with new business
sales increasing by 8% to GBP357m (2021: GBP332m) on a PVNBP basis,
outperforming the market and growing our market share in the
segments we have chosen to compete in. As a result our new business
trading profit increased to GBP14m (2021: GBP5m).
Ends
For further information:
David Gwyer David.gwyer@lv.com 07798 796 907
The full LV= results can be found at: LV.com/annual-report
Notes to editors
These numbers are unaudited.
i, ii, iii The Solvency II capital metrics reported in this
press release are based on the estimate of the year end results as
at 29 March 2023. It is possible that the capital position will be
adjusted prior to the publication of the group Solvency and
Financial Condition Report later in 2023.
Certain statements in this press release may constitute
"forward-looking statements". These statements reflect the Issuer's
expectations and are subject to risks and uncertainties that may
cause actual results to differ materially and may adversely affect
the outcome and financial effects of the plans described herein.
You are cautioned not to rely on such forward-looking statements.
The Issuer disclaims any obligation to update their view of such
risks and uncertainties or to publicly announce the result of any
revisions to the forward-looking statements made herein, except
where they would be required to do so under applicable law.
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END
FR JMMATMTMJMRJ
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