LV profits hit by Ogden and motor claims inflation

LV= General Insurance, which is now part of Allianz UK, recorded a 13% drop in operating profit to £93m for 2019 and a deterioration in its combined operating ratio to 94.9%. Gross written premiums were up 12% to £1.57bn from £1.4bn the year before, excluding £181m of discontinued commercial lines business.

Steve Treloar, LV= general insurance CEO underlined that the fall in operating profit reflected the adverse Ogden impact of pumping £13m into its reserves -- compared to a £35m Ogden release the year before. Excluding Ogden, he said its underlying COR improved by just over 1% to 93.8% on a like for like comparison with 2018.

Claims inflation also continued to be felt in motor with significantly increased levels of theft and vehicle repair costs.

Kevin Wenzel, LV= General Insurance chief financial officer, said: "Claims inflation in motor continued to put pressure on profitability with significant increases in vehicle thefts and higher costs of vehicle parts due to increased technology in cars. This contributed to an overall level of claims inflation of around 6%. In response, our rates were increased to broadly maintain our current year motor loss ratio, and strong cost control improved our expense ratio by 0.4% to 21.7%.”

In terms of distribution, the insurer added that direct business premiums were up 7% -- boosted by new products, including Multi Car and Home Plus. Broker business also delivered growth of 24%, excluding discontinued business lines, due to the migration of the personal lines business from Allianz, which saw it broaden its distribution to 1,400 brokers and double the number of products across both car and home

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