Mutual insurance, retirement and investment group LV= revealed today that operating profit had dropped to £33m in the six months to 30 June, down from £79m this time last year.
The firm's chief executive, Richard Rowney, who replaced previous boss Mike Rogers this year, said the lower group operating profit "reflects lower operating profits in the general insurance business and a £19m loss in the heritage business mainly driven by claims experience variances".
LV='s general insurance operating profit dropped 69 per cent to £22m, from £70m, while underwriting profit was down 85 per cent to £8m from £53m. Premium income rose eight per cent to £785m from £729m. The firm reported that combined ratio had worsened to 98.5 per cent from 92.1 per cent this time last year.
"In the first half of 2015, the general insurance result benefited from a number of favourable one-offs that have not repeated this year," the group said.
"As we indicated at the time, the operating profit was boosted by exceptional levels of prior year reserve releases of £55m compared to £13m this year."
LV= added that it's been seeing motor claims inflation at the top end of expectations, "driven by increases in technology in cars which makes repair costs more expensive", meaning it expects motor rates to strengthen in the second half of the year.
"We are operating in a prolonged low interest rate environment with significant volatility and this has created challenging market conditions," Rowney said. "We will remain disciplined in the management of the business, exercising strict controls over the allocation of capital to the right product areas."