THE boss of major Dorset employer LV= has said its underlying performance is “fantastic” despite one-off factors dragging it down to a £49million loss.
A government change in the way personal injury compensation is calculated led to LV= putting aside £139m for higher claims.
But the financial services mutual, which employs 3,000 people at County Gates, saw income from premiums rise 16 per cent to £2.2billion in 2016.
Its general insurance arm made an operating profit of £113m before the changes but a loss of £26m afterwards, after a £72m profit in 2015.
Chief executive Richard Rowney told the Daily Echo: “The whole industry was affected by one-off exceptional items – sometimes they can be positive and sometimes negative.
“You’ve always got to look at what the underlying health of the business is.”
He added: “Operating profit, once you strip out exceptional items, is up 49 per cent, £159m compared to £107m – that’s a fantastic result.”
Commentators had warned earlier this year that millions would be wiped off insurers’ profits by the changes to personal injury pay-outs. Aviva, a key competitor for LV=, has already said the change would cost it £380m.
Mr Rowney said the business was strong enough to absorb the change and that it was possible that an outcry could lead the government to re-think the policy.
LV=’s “heritage” business, of products no longer marketed, lost £35m after making £88m last year.
Mr Rowney pointed to LV=’s continued high ratings for customer service.
“What we’re most proud of is what our people are most proud of – the customer service that people in Bournemouth and around the country give,” he said.
“In a world where financial services companies are very often berated for not being on the side of the customer, we’ve been the most recommended insurer in the UK for the third year running and the most trusted life insurer for the fourth year running.
“Which?, who are pretty tough, have made us a recommended provider for car insurance, home insurance, travel insurance and breakdown cover – a full suite of things.”
LV=’s annual report shows Mr Rowney received £1.16m in remuneration in his first year as chief executive, including £398,000 in salary, £87,000 in pension, £430,000 in annual bonus and £236,000 in long-term incentives.
Steve Treloar, managing director of general insurance, took a total of £1.7m, including a £246,000 salary and a £1.24m buyout of the annual bonus and share awards he was forfeiting from his previous jobs.
Mr Rowney said: “A big PLC or any organisation will remunerate its directors based on the underlying performance of the business.”
He said LV= was transparent about directors’ pay and members could vote on remuneration.