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LV= announces 2020 financial results


Life, pensions and investments business LV= announces its financial results for the year to 31 December 2020 and publishes its annual report.

Strategic and operational highlights:

  • Completed comprehensive strategic review and announced sale to Bain Capital Credit representing an excellent outcome for members.
  • Increased market share for the first time since 2016.
  • Made enhancements to Life and Critical Illness Cover as part of continual improvement of the protection suite of products.
  • The Smoothed Managed Fund performed particularly well faced with a volatile market.
  • Increased digital capability to improve access for advisers including launch of Equity Release portal.
  • Introduced Covid support for vulnerable customers including payment breaks and premium reductions.

Financial highlights:

  • Group Solvency II capital coverage ratio 198%(i) (FY 2019: 244%).
  • New business PVNBP £1.3 billion (FY 2019: £ 1.4 billion).
  • Operating capital generation £103 million (FY 2019: £101 million).
  • Operating profit £40 million (FY 2019: £16 million loss).
  • Profit before tax from continuing operations £37 million (FY 2019: £15 million).
Mark Hartigan, LV= Chief Executive, said:
“Despite the unprecedented challenges presented by the pandemic, LV= has delivered a good financial performance in 2020. Through the year we have created significant momentum in our trading businesses and I am particularly pleased that we increased market share in both Savings & Retirement and Protection. By taking quick and positive actions in response to Covid-19, as well as delivery of planned change initiatives, we continue to improve service for customers and have strengthened the propositions we offer the market.

“We are reporting a strong Solvency II capital surplus of £690 million(ii) and an increased operating profit of £40 million. I am pleased that we have again been able to share some of the financial benefits with our With-profits members through the allocation of a £28 million pounds mutual bonus. This has been applied by uplifting the asset share of relevant With-profits policies by up to 1%.

“The vast majority of our people have been working from home since the first lockdown in March 2020. I was impressed with how quickly our teams were able to adapt to home based working. It is thanks to the hard work and dedication of our people that we maintained good levels of service and didn’t need to close our phone lines at any stage. Over the course of the year we managed to increase our Net Promoter Score among financial advisers.

“During 2020 we completed a significant change agenda and delivered a number of initiatives that helped improve our trading performance. We increased our market share in both the Protection and Savings & Retirement businesses for the first time since 2016.

“In Savings & Retirement our focus has been on developing our Smoothed Managed Fund (SMF) investment proposition, which offers protection from market volatility while still facilitating access to potential upside. We increased functionality and accessibility through online valuations and the launch of a Trustee Investment Plan variant. The underlying funds performed particularly well making SMF more compelling than ever. We also launched our new Equity Release Portal, which allows advisers to complete and track lifetime mortgage applications more efficiently. This was followed by the release of a new Lifetime Mortgage product, Drawdown+. This allows customers to borrow a portion of their property value in the form of an initial loan, with the option to borrow more in the future from a pre-agreed reserve.
“In our Protection business we launched a number of improvements to our Life and Critical Illness Cover, with Enhanced Children’s Cover now available. We also improved our Family Income Benefit offering making it available through an online application. As part of our drive to increase digital capability and ease of access, we launched our Protection Progress Hub for advisers. This provides self-serve capability so that advisers can quickly and easily track new business applications. In addition to the product enhancements and adviser support measures, we also received extremely positive feedback on our response to Covid-19. We took a flexible and personal approach which helped our customers maintain their protection policies through a difficult period. This included initiatives such as payment breaks for our most vulnerable customers and premium and cover reduction options for others.”

Financial Highlights:



FY 2019

Change (%)

Operating profit

£40 million

£(16) million loss


Trading profit

Savings and Retirement




£8 million

£2 million

£(1) million loss


£25 million

£15 million

£3 million





New business sales (PVNBP basis)

Savings and Retirement


£1.29 billion

£1.04 billion

£252 million

£1.40 billion

£1.14 billion

£263 million




Tough trading conditions adversely impacted both our Savings & Retirement and Protection businesses resulting in lower volumes and margins. In Savings & Retirement new business sales were £1,039 million (FY 2019: £1,143 million) and in Protection new business sales were £252 million (FY 2019: £263 million).  Savings & Retirement generated £8 million of trading profit (FY 2019: £25 million) and Protection £2 million of trading profit (FY 2019: £15 million).

Our Heritage business includes ordinary branch and industrial branch with-profits policies along with some non-profit business. Our main With-profits fund delivered strong returns of 8.9% (FY 2019: 14.5%), outperforming the benchmark of 6.2%.
Operating profit of £40 million (FY 2019: £16 million loss) benefited from investment income of £15 million (FY 2019: £8 million) and favourable reserving changes of £16 million (FY 2019: £67 million adverse). 

Profit before tax from continuing operations of £37 million (FY 2019: £15 million) contains non-operating spend of £96 million (FY 2019: £98 million) offset by favourable short-term investment fluctuations of £93 million (FY 2019: £129 million).

Operating capital generation of £103 million (FY 2019: £101 million) includes £58 million (FY 2019: £87 million) from our trading businesses. The Solvency II capital surplus has decreased by £254 million to £690 million(iii) (FY 2019: £944 million), reducing our Capital Coverage Ratio to 198% (FY 2019: 244%), at this level it is still at the top of our risk appetite range of 140% - 200%. The reduction was driven by distributions to members which included the introduction of an exit bonus, further de-risking of the pension scheme and economic variances largely driven by falling swap rates which are offset by TMTP movements.

Targeted operating expenses increased to £108 million (FY 2019: £99 million) as we took back our share of overheads previously allocated to the general insurance business. While we anticipated an increase in the region of £16 million at the start of the year, our ongoing cost control initiatives restricted the increase to £9 million. Restructuring to realign our cost base to reflect the reduction in size of the business will continue going forward. It is expected that this will reduce targeted operating expenses in future years to below £100 million.

Every year the Board reviews its strategic objectives and long term plans. This year was our first full year trading as a stand-alone Life and Pensions business and it was especially important in these circumstances that the Board continue to be driven by its primary objective to act in the best long-term interests of our 1.25 million members.  

To remain competitive LV= requires long-term access to capital for investment. This requirement meant there was insufficient internal capital to both invest sufficiently and ensure the interests of With-profits members are met. This led to a comprehensive and rigorous review to assess the strategic options available to the business. It concluded that continuing to fund investment in the new business franchise from the estate would not be in the best interests of our With-profits members. After careful consideration taking much of the year, the Board was unanimous in its decision to pursue a transaction with Bain Capital Credit. The transaction was announced on 15 December 2020 and subject to member and regulatory agreement, we expect it to complete by the end of March 2022. Members will be provided with detailed information ahead of a vote to enable the transaction. The vote is scheduled for the first half of this year. A successful vote will lead to an excellent financial outcome for members and will secure long-term investment to support LV=’s future.

“Success in 2021 will be determined by three simple objectives; to deliver the transaction with Bain Capital Credit, to hit our trading targets and to continue to reduce the complexity of our business and improve efficiency. With the backing of Bain Capital Credit, the board is excited by the opportunities for LV= to develop as a major force in the UK life insurance market for the benefit of our customers, people and partners.”

Mark HartiganLV= Chief Executive


The full LV= results can be found at:

These numbers are unaudited.

i, ii, iii The Solvency II capital metrics reported in this press release are based on the estimate of the results as at 26 March 2021. It is possible that the capital position will be adjusted prior to the publication of the group Solvency and Financial Condition Report later in 2021.

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.