FINANCIAL services company LV= has seen operating profits rise by almost a fifth despite a fall in income from insurance premiums.

The company, based at County Gates, said group operating profit was up 19 per cent to £105m in the year ending December 31, 2013.

That was despite net earned premiums falling four per cent to £2.2bn.

The group said customer numbers had continued to grow to 5.5m despite ‘challenging’ market conditions, primarily driven by attracting 273,000 more general insurance customers.

It was Britain’s most recommended insurer, according to the YouGov Brandindex.

The company raised £350m in capital last May to strengthen its financial position and support business growth.

The capital raise was five times oversubscribed. Group chief executive Mike Rogers said: “I am pleased to report that we have increased our profit before tax in 2013 to £156m, from £103m.

“This has been achieved despite challenging mar-ket conditions.

“As a mutual, our efforts are focused on providing an excellent service to our customers and driving increased member value.

“As such I am delighted to confirm a mutual bonus of £22m for 2013. This will be added to eligible members’ policies on pay-out and means we have now allocated £62m back to members over the past three years.”

The group’s two core insurance business areas, of direct and broker insurance, now underwrite three million and 1.4million policies respectively.

LV= blamed falling motor premiums for a decline in premium income, but said it had added 273,000 new policies during the year.

It now has 4.4million policies in force, including 442,000 road rescue policies – up 44 per cent during the year – and 650,000 home insurance policies.

It remains the UK’s third largest private car insurers, with 3.1m vehicles insured.

Underlying operating profit in the life and pensions business was up 12 per cent to £29m.

The retirement business saw a five per cent fall in sales and the protection business a fall of nine per cent, but new business brought in £22m overall.

Mr Rogers believed motor premiums would go through a ‘modest hardening’ over the next year.

He said there could be a significant reduction in annuity sales over the next few years following the Chancellor’s pension reforms but that the business was poised to prosper in the longer term.