Chief Executive Statement 11
We are now established in top five positions gender pricing, neither of which we anticipate will
in the majority of our chosen markets in both have a significant impact on our business model
life and general insurance and we have clear or prospects.
strategic visions for each business which are
coming to fruition. Looking forward we plan to continue to develop
our direct to consumer proposition and hope to
General insurance see renewed growth in the protection market as
I’m pleased to report that general insurance economic conditions ease. We believe there is
had an extremely good financial year. Stronger than the opportunity for continued progression in our
expected return from investments delivered specialist retirement business across both annuities
an underlying operating profit of £117.1 million and pensions, where we are a leading player in the
(2011: £76.4 million). Profitability was achieved drawdown market and pension consolidation.
despite some £25 million of exceptional weather
related costs and further strengthening of our Group-wide
reserves. During the year we saw a return to price During the year we continued to invest in preparation
competition in the general insurance market with for Solvency II, including the development of
downward pressure on motor and home rates, our internal model application and enterprise
which we do not believe is sustainable into 2013, risk management framework. The delay to the
given continuing personal injury costs and low implementation of Solvency II, announced during the
projected investment returns. Our pre-tax return on latter part of 2012, is frustrating but much of the
capital employed was also significantly ahead of our investment will continue to bear fruit for us as we
expectations. Our focus on key product lines such manage our capital and risks ever more effectively.
as car and home in the last five years means we are
now established and profitable in these markets and Within our legacy business lines, the team continue
we can increasingly focus on broadening our offering. to work hard in relation to matured policies that
have not been claimed. As a result since 2007 we
We were particularly pleased to see the continued have reunited members and their beneficiaries with
strong growth of our SME business line with GWP up over £14 million in unclaimed assets.
40% to £74.6 million and a strong improvement in
our combined operating ratio for this business. Most The morale of our people is crucial to the success
of the growth in our motor book came from our direct of our business since it has a direct impact on the
business, which grew its customers by 260,000 experience that our customers receive. To measure
over the year. We are now established as one of the how our employees feel about working at LV= we
Statements and Reviews
UK’s top three private motor insurers, with over 70% conduct an annual staff survey called ‘Engage’
prompted brand recognition, an excellent customer across the group. The survey, conducted in October
service reputation and strong renewal rates. 2012, showed that 88% of those working at LV= felt
positive about the brand and its values, 85% said
During the course of 2012 the general insurance that LV= is an ethical organisation and 83% said
business received many industry accolades from they felt engaged as an employee.
both consumers and the industry alike. The most
prestigious of these was being voted General These results are despite the decision to close
Insurer of the Year at the British Insurance Awards. our employee final salary pension scheme to
future accrual with effect from 1 July 2013, and
Our Businesses
Looking forward to 2013, we do not anticipate offer to move all affected employees to a defined
a repeat of the strong investment return seen contribution scheme from that date. We remain
in 2012, however we anticipate a continued committed to providing our employees with a
underwriting profit together with increased revenue competitive retirement proposition.
growth across home, motor and SME, leading to
returns on capital and growing cash generation, Our brand goes from strength to strength and we are
allowing continued capital flow to the Society. attracting increasing recognition and awareness across
consumers and the introducer community, including:
Risk Management
Life business l Moneywise: Most trusted car insurer – voted for
Our protection and retirement businesses in life saw by consumers.
excellent growth in sales of 15% and an underlying l Moneyfacts: Award for best car insurer and best
83%
operating profit of £26.3 million (2011: £24.5 customer services – voted for by consumers.
million). Our strategy of focusing on market segments l Winner of best customer services in financial
employee engagement with attractive margins and good growth potential services at the European Call Centre Awards –
where we have relative scale and expertise, has voted for by the industry.
Corporate Governance
resulted in a continued strengthening of our market l Financial Adviser: Five star life and pensions
share positions. We maintained our top three position provider – voted for by the industry.
85%
in enhanced annuities, a market which is continuing to l Moneyfacts: Best income protection provider –
show strong growth driven by a shift in demographics. voted for by consumers.
of our employees think we
are an ethical organisation In protection our position as a specialist, focused In a challenging year LV= has been able to deliver
on market leading positions in income protection excellent results. Despite the uncertain outlook
and critical illness, amongst others, has allowed for the UK economy, we are confident that our
88%
us to grow in a market which is generally stagnant. successful business model and strong competitive
2012 was a very challenging regulatory year for the position in our chosen markets leaves us well
Our Accounts
feel positive about our life industry and we successfully managed the initial placed for 2013.
brand and values introduction of the Retail Distribution Review and