LV=’s operating profit dropped to £33m in the first half of the year from £79m in the first half of last year due to declining general insurance operating profit.
The insurer’s GI operating profit fell by 69% year-on-year to £22m this year, down from £70m in H1 2015.
LV= explained the rapid decline by saying last year’s result “benefited from a number of favourable one-offs”, as its reserve release – a release of reserves set aside for claims – stood at £55m in H1 2015 compared to £13m this year. LV=’s chief executive Richard Rowney also said declining profit reflects “a £19m loss in the heritage business mainly driven by claims experience variances”.
The insurer’s life business operating profit was more positive, almost doubling from £12m in H1 2015 to £28 in the first half of this year.
Rowney added: “We are operating in a prolonged low interest rate environment with significant volatility and this has created challenging market conditions.
“We will remain disciplined in the management of the business, exercising strict controls over the allocation of capital to the right product areas.”
LV=’s profit stood at £39m in H1 2014, indicating that last year’s figure was indeed a one off.