Following the actions taken in 2017 to strengthen our capital position, 2018 has been all about putting the foundations in place from which to build a sustainable future as a focused, independent Life & Pensions business.
Our capital position continues to be strong and our Capital Coverage Ratio stands at a healthy 172% with positive contributions from both trading businesses. At this level it is well within our risk appetite and maintaining this relative position will continue to be an area of management focus in the future.
Operating profit of £136 million (FY 2017: £134 million) includes £60 million from Life and £107 million from General Insurance partially offset by strategic investment and group items of £31 million. Profit before tax was hit by deteriorating financial markets in 2018 leading to a significantly reduced profit of £20 million (FY 2017: £122 million).
Our General Insurance strategic partnership with Allianz which came into effect at the start of 2018 is working well. We will complete the process of transferring the renewal rights for Allianz personal lines business to LV= in May and remain on track to complete the operational separation of the General Insurance business ahead of plan.
Looking to the future, we are today announcing plans to convert from a friendly society to a company limited by guarantee. Our proposed changes are about LV=’s future as a thriving, successful mutual creating value for our members. If implemented they will improve our ability to manage the business in the best interest of members and provide greater flexibility and freedom to compete over the medium to long term.