12 LV= Annual Report 2012
Finance Director Review
Philip Moore
Finance Director
We focus on delivering strong returns for members,
while managing and protecting our capital position.
Overview
Throughout 2012 LV= operated against a backdrop of profitable growth from both the life and general
of volatile financial markets, continued weakness in insurance businesses. This is particularly notable
the UK economy and uncertainty in Europe, with the given the increased competition in the markets in
FTSE 100 falling as low as 5,270 in May and credit which we operate.
spreads widening to 2.87% at the start of the year.
The £120 million improvement in IFRS profit before
Despite this we can once again report a good tax to £103.2 million (2011: loss before tax £16.9
financial performance this year with the life and million) reflects the underlying operating profit
general insurance businesses continuing to performance and positive short-term investment
perform well and the investment returns of our fluctuations, particularly in life, which accounted for
with-profits members’ assets outperforming £89 million of the improvement year on year.
market benchmarks.
Results for 2012
As a result of this success, LV= has delivered on The table opposite summarises the underlying
its financial aims of delivering strong returns to operating profit split between our businesses.
members, while managing the capital position and Underlying operating profit excludes the impact of
continuing to foster ongoing growth. model and valuation changes, and a margin for
prudence in the life valuation assumptions compared
Underlying operating profit in 2012 of £126.2 to the value of new business assumptions for
million (2011: £105.8 million) reflects another year example in the credit default allowance.