Q&A – Liverpool Event 8th July 2008

During the Liverpool Regional Member event we answered a number of our members queries.  Here are just a selected few….

Has LV= taken a hit on its investments from the fallout of the mortgage crisis in the US?

LV had no direct exposure to any of the structured subprime investments which lost value due to the US mortgage crisis.  Inevitably, the fallout of the crisis has seen widepsread falls in global equity markets over the last 8 to 12 months which has impacted the absolute return on our investment portfolios. However, overall our investment portfolios have performed well in relative terms, beating the global benchmark against which we are measured.

Can you explain why the bond I took out in 2000 performed so much more disappointingly than the one I took out in 2003?

It is difficult to be precise without knowing the precise dates involved. In general terms, however, it is likely that this is a question of timing. Following an extremely strong run (the so-called 'Technology bubble') during the latter half of the 1990s, world equity markets peaked around the end of the decade. From this point there was a sharp decline, of approximately 50% in value, which saw markets in a downward trend until the early part of 2003. Being a global portfolio exposed to equity markets, your bonds' performance is driven, in part by the performance of the markets in which they are invested. To put this in a UK context, the FTSE-100 Index reached its all-time high of 6950 points in December 1999, before falling to around 3550 in February 2003. Today, the index stands at around 5411 points. For more information, please take a look at the chart below.
 
Your earlier bond was taken out during 2000, when markets were still close to their peak, while the subsequent bond was taken out in 2003, when markets were much lower. Comparing both of these approximate starting points to where we are today, it is clear that the earlier bond will not have performed so well as the latter.

What is LV='s stance on ethical /green investments?

The Society's investments are managed by LV= Asset Management (LVAM). Generally, we prefer to follow a policy of socially responsible investment through engagement with the management of companies in which we invest, rather than just by excluding a company from our investment portfolio purely on the basis of its ‘ethical stance' or the nature of its business.

We believe that, in conjunction with other institutional shareholders, it is better to have a dialogue with management and try to change, when appropriate, a company's policies, attitude or behaviour, rather than to sell shares and lose the opportunity to engineer change.

We also believe that an institutional investor discharges its responsibility to society more effectively by taking a balanced, proactive view, rather than an antagonistic stance likely to inhibit change. In LVAM's case, such responsibility is examined on a case by case basis without an overriding blanket approach.

In addition, our experience shows that ‘unethical' businesses are less likely to be attractive investments in their own right, and therefore we are less likely to be interested in their shares.

Finally, we need to balance the fact that our members will have a variety of views on what ‘ethical' is, with our principal goal of providing good returns to our members from the investment choices that we make."

It seems unfair that you penalise drivers with bigger engines and who live in certain postcodes. How do you differentiate between low and higher risk drivers?

There are a number of factors to take into account when calculating your car insurance premium. 

Whilst it is not always the case that cars with larger engines are rated more highly, this is often the case because of their increased performance leading to more high speed accidents as well as the often higher repair costs for larger vehicles.  We look at the vehicle make and model when assessing how we rate a particular vehicle rather than just the engine size. 

The rates that we charge for every vehicle make and model are derived from a combination of typical repair costs together with our own loss experience for particular makes and models of vehicles. 

Similarly, the rating of risks according to the postcode of a member is derived from our own loss experience.

Do we support any charities?

Yes. Our corporate social responsibility strategy is to help support and protect children and their future.  This year we are supporting Great Ormand Street Hospital and the Youth Cancer Trust.  We also sponsor locally based initiatives.  The Streetwise Safety Centre helps children by raising their awareness of everyday safety and good citizenship issues. We have also sponsored the Croydon Opportunity PreSchool Group, a voluntary organisation playing a vital role in the care and development of children with special needs between the ages of three months and five years. In addition to the corporate activity, we also support our employees in their fundraising, matching the money they raise pound for pound.  

Can you make it clearer to members that they are entitled to discounts off your products?

Yes. We are constantly looking at how we communicate our member discounts and welcome the feedback we have had.  We recently launched this new website that is dedicated to our members and customers that explains the full benefits of membership. 

We have also been working on improving the member literature you receive including the Member Welcome Pack and regular Member News updates that are published.  Internally, we have recently produced fresh training material for our call handlers to make them more aware of the benefits of membership ensuring that they can provide better customer service.

Please ensure you ask for your membership discount at the time of calling.

Can we have more meetings like this in future?

Yes. Generally, we hold two regional member events every year and the choice of location is decided by demand, where we have held previous meetings and where our members live.  This way, we aim to see as many of our members as often as we can. 

We are currently hoping to hold a second meeting in Liverpool later in 2008 to meet the exceptional demand from members in the area.  

We are also reviewing how we run our events in future and would welcome your ideas.  If you are interested in attending a regional member event please email samantha.preece@lv.com