Chairman Statement 9
The banking crisis of 2008 caused an enormous Group
shock to economies throughout the world, and the LV= now has a well established and strong
consequences are still with us. Businesses and brand. This awareness along with our distinctive
consumers continue to be financially stressed as and award-winning customer service proposition and
a hesitant recovery is attempted. It will clearly be products means that we are well placed for future
some years yet before stability is fully restored. In profitable growth. Fundamental to this is that we
this context, LV= is well placed to help customers put our people at the heart of our business. We
with our focus on offering good value, relevant have been externally recognised by Towers Watson
products, backed up by award-winning customer as a high performing organisation and we believe
service. Our purpose remains to help people look that the culture we have created for our people
after what they love and to deliver on our vision to results in high performing teams, focused on
be Britain’s best-loved insurer. In so doing, we are driving the business forward for members.
confident that we will achieve our overriding goal of
creating value for the benefit of our members. Member value
As LV= is a mutual and not a quoted company,
General insurance we use Enterprise Value as a way of measuring our
The general insurance business has been market value in a way that is broadly equivalent to
completely transformed over the last six years a quoted company. Our overall Enterprise Value has
to become a major player in retail markets, and increased by 3% this year, after taking mutual bonus
one that is known for its award-winning customer into account, and follows a 9% increase in 2011.
service. We are now number three in private motor
insurance (cars and motorbikes) with an 11% In line with our core ambition of creating value
market share and a significant player in our other for the benefit of our members, I am pleased to
key lines, particularly home insurance and small confirm that, for the second consecutive year,
business insurance. the board has approved a mutual bonus for
with-profits members of £20.9 million
Statements and Reviews
We have a good mix of products across personal (2011: £18.6 million) reflecting the impressive
and commercial lines and we are now well full year performance and the strength and
established in both the direct and broker channels. sustainability of the Society’s financial future.
We have 2.7 million customers in our direct Group total balance sheet assets are also up
business and, having come from a standing start 11% to £11.4 billion from £10.3 billion in 2011.
in 2007, the broker business now has 1.4 million
customers, both considerable achievements in a Maintaining standards
market that is highly competitive. The board continues to guide the development
and delivery of our strategy, and to oversee all
Our Businesses
This business is now self-supporting in terms of material aspects of the management of risk and
cash and capital generation, and for the first time return. We continue to apply the same standards
returned £38 million of funds to the group following of best practice corporate governance that an
a year of record profits in 2012. equivalent shareholder-owned business would
be expected to meet.
Life
Our life business has similarly refocused over the Board changes in the year included welcoming
same period, concentrating on market segments James Dean as a new non-executive director and
Risk Management
with attractive margins and good growth potential. chair of the Audit Committee, and saying farewell,
Enterprise Value As a result we have strengthened our market share with our thanks, to Ian Reynolds who stood down
+3%
positions whilst building profitability. We are the having served a term of four years.
market leader in advised income protection and a
top three provider for pension drawdown, enhanced We have well established competitive positions in
annuities and equity release. attractive markets across general and life insurance
which provide the group with a diversity of earnings.
With-profits Our with-profits policies continue to be among the
Corporate Governance
Our capital position remains strong enabling us to
asset shares best-performing in the market. The first full year retain a high equity backing ratio for the benefit of
outperformed with Threadneedle Asset Management Ltd (TAM) our with-profits members as well as paying a
benchmark by 1.5% managing the assets has seen continued good mutual bonus.
producing a total performance and as a result we have maintained
overall return for our record of exceeding relevant benchmarks in the I would like to thank all our members and
the fund of 9.9% short, medium and longer terms. customers for their loyalty to LV= and our
employees for their commitment and hard work.
We will strive to ensure that we continue to retain
your confidence.
Our Accounts