According to its half yearly results, equity release sales fell from £57m in the same period last year, due to reliance on funding from its annuities business where sales have dropped to £146m in the first half compared to £232m in Q1 2014.
Overall, operating profit at the group more than doubled to £79m compared to £39m last year, with protection sales contributing to strong growth. The insurer also recorded a significant uplift in operating profit for its life business, totalling £12m in the first quarter of 2015, compared to a loss of £5m in the same period last year.
Income protection sales have played a key role in the boost in LV’s overall profits, as sales increased by 50% during the half year. Overall protection sales increased to £144m in the first half, compared to £96m in Q1 2014.
Despite a fall in its equity release and annuity sales, overall retirement business increased by 15%, which LV said was driven by a rising demand for income drawdown following the 2014 Budget pension changes.
John Perks, managing director of retirement solutions at LV, said the insurer planned to obtain other sources of funding in order to boost growth in its equity release business.
“We expect to reverse the drop in equity release sales going forward. The initiatives that we’ve been focusing on since the Budget around moving to different sources of funding look to be well advanced. In the meantime we’ve been improving our processes and proposition and rebuilding our business development team for those opportunities,” he said.
“What we’re focusing is on helping people to optimise their pension savings and then understand how to bring equity release into their holistic financial planning.”
Perks added that LV was looking at making its retirement product set more unified into a single platform, to reflect the changing habits in how individuals access retirement income.
Richard Rowney, managing director of life and pensions, added: “The impact of the 2014 Budget has led to a change in buying behaviour with more pension savers shopping around for retirement income solutions. LV offers a range of products and we have seen strong sales, up £95m compared to H1 2014.
“The protection business has performed extremely well in the first six months of the year and total sales have increased by 50%, with increases across all core lines, including income protection, critical illness and term. We plan to build on our existing product range and broaden our offering including launching our new business protection proposition later this year,” he concluded.