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Catch up with the latest press releases from LV=

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LV= Launches First Ever Mutual Bonus

Press release: 30/05/2011

Insurance, investments and retirement group LV= today announced the launch of a mutual bonus scheme. LV= has undergone substantial growth in the last few years and the aim of the mutual bonus scheme is to reward qualifying members [1] for their ownership of the Society and their support for the risks taken in growing and establishing the trading businesses. These include the at-retirement and protection product ranges, general insurance and asset management.

The first mutual bonus declaration will total £10million and is based on the expected financial performance of the LV= group for this financial year. It will take the form of an additional investment into members' with-profits funds, and will be added on 1 September 2011. The bonus represents an increase of around 0.5% to the value of the asset shares. It will ordinarily form part of the amount payable when there is a claim, for example when a policy matures or is cashed in early, or for annuities, it will increase the income payable alongside the 2011 annual bonus allocation. The mutual bonus scheme is in addition to the other benefits which LV='s members enjoy, including the regular bonuses that with-profits members already receive [2].

Subject to future financial performance and capital strength, LV= aims to make the mutual bonus an annual benefit for qualifying members. Therefore at the end of 2011 and in future years, LV= will review its performance and decide on the mutual bonus declaration, including who will benefit and how it will be paid. As an example, it is intended that for those members with with-profit policies, the bonus will amount to around a 1% increase in asset share in future years.


How much could the mutual bonus be worth?

With-profits growth bond (in-force projection)

Years left to run

Current value of investment

Projected yearly growth rate

Projected payout before mutual bonus 3

Projection with example 1% mutual bonus each year3

Extra value with mutual bonus

Increase in Projected Payout

Five years

£25,000

5.75%

£34,700

£36,400

£1,700

4.9%

10 years

£25,000

5.75%

£45,900

£50,700

£4,800

10.5%

These examples are based on with-profits growth bonds which will be surrendered in five and 10 years time. The projected yearly growth rate is shown before charges are taken and values are based on a current investment value of £25,000 [3].

With-profits endowment

Maturing in

Members age in 1991

Projected yearly growth rate

Projected payout before mutual bonus3

Projection with 1% example mutual bonus each year3

Extra value with mutual bonus

Increase in Projected Payout

2016

37

5.75%

£12,400

£13,000

£600

4.8%

2021

33

5.75%

£18,000

£19,600

£1,600

8.9%

These examples are based on with-profits endowment policies which were taken out in 1991 and mature in five and 10 years time. The projected yearly growth rate is shown before charges are taken and values are based on a premium of £20 a month [3].


Philip Moore, LV= group finance director said: "The LV= group has made a strong start to 2011 and we are delighted to be able to launch our mutual bonus scheme and declare a £10m bonus. We are one of the UK's strongest mutuals and we intend to make the mutual bonus an annual benefit for our members subject to continued strong trading performance and positive financial outlook."

For more information, log on to www.lv.com.


LV=

LV= is a registered trademark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs around 4,500 people, serves over four million customers and members, and manages around £8.0bn (as at 31 December 2010) on their behalf, via LV= Asset Management (LVAM). We are also the UK’s largest friendly society and a leading mutual financial services provider.

LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF. www.LV.com.


[1] The Board will determine from time to time which categories of LV= members are eligible for the mutual bonus. The investments of LV= members whose policies were acquired from the RNPFN are held in a ring-fenced fund and therefore these policies will not receive a mutual bonus payment.
[2] Source: Bonus declarations Q1 2011

Provider

25 year conventional with-profits payout (£50pm, male, 30 next birthday)

LV= members better off by

LV=

£47,096

Friends Life (ex AXA)*

£36,316

£10,780 (30%)

Royal London

£34,304

£12,792 (37%)

Friends Life (ex Friends Provident)

£31,374

£15,722 (50%)

Scottish Life

£29,313

£17,783 (61%)

* Sun Life Assurance Society Conventional With-Profits fund

[3] It is important to remember that past performance is not a guarantee of future returns as these depend on bonuses yet to be declared. In particular, the mutual bonus is entirely discretionary and there is no guarantee that such a bonus will be declared every year.