Its life and pensions underlying profit results fell from £29m to £17m which LV said had been caused by the impact of the Budget changes on its retirement business.
However, profits from equity release grew from £4m in 2013 to £8m as at the end of last year.
John Perks, managing director of LV Retirement Solutions, said this was a growth area for the business and one which it intended to focus on more in the coming year.
“There is going to be less funding from the market [for equity release] going forward because of the fall in annuity volumes,” he said. “We are in a relatively good place because we don’t have as high a proportion of equity release as some of our competitors so we have a bit of head room to continue funding. Obviously we are hopeful that our new propositions will drive more annuity business in.
“We are currently tendering for a few external funding elements. Our actual plan is to grow this business strongly. I would expect margins to narrow a little bit just because of the impacts of Solvency 2 and some of the structuring that will be needed around the product. But we think the product has a really strong future.”
Profits from its protection business grew from £6m in 2013 to £10m last year with an 11% increase in protection new business sales at £217m compared to £195m in 2013.
LV reported a 76% fall in profit before tax from £156m in 2013 to £37m which the group said was due to ‘less favourable short-term investment fluctuations’. Operating profits, which LV said was a better indication of how the business was performing, fell by 18% year-on-year, to £86m.
Myles Rix, managing director of protection, said: “We buy assets and hold them years stretching into decades, so how the market happens to value those assets at any given moment is not too much of a concern in terms of the way that reports through to our numbers. We have to mark those assets to how the market is valuing them.”
