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Catch up with the latest press releases from LV=

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LV= announces strong 2012 With-Profits performance

Press release: 07/03/2013

Insurance, investment and retirement group LV= announces its annual with-profits payouts and performance.

  • The LV= with-profits fund achieved an investment return of 9.9% in 2012.
  • A 25-year policy covering a £50,000 mortgage is currently paying a surplus of £15,740 (for a male aged 30 next birthday at entry, the maturity value for a 25-year low cost mortgage endowment maturing on 1 March 2013 is £65,740).
  • A £50 a month 25-year savings endowment policy maturing on 1 March 2013 (for a male aged 30 next birthday at entry) will pay out £39,585, equivalent to an annual yield of 7.0%.
  • LV= confirms mutual bonus of £20.9 million meaning policyholders will benefit from a further 1.1% mutual bonus uplift within their with-profits payouts

Paul Downey, LV= With-Profits spokesperson said: “LV=’s with-profits are among the best-performing in the market. As a mutual, our policyholders also benefit from an additional mutual bonus, giving them a greater return on their with-profits investment.”

Maturity values for mortgage-linked low cost endowments as at 1 March 2013

Policyholder: Male, aged 30 next birthday at entry

25-year endowment

Mortgage amount
Guaranteed death benefit
Maturity value

£50,000
£50,000
£65,740

Surplus £15,740

Equity backing ratio

As at 31 December 2012, the LV= with-profits fund had 45% invested in equities, 8% in property, and 4% in venture funds, all assets with strong potential for long-term growth. The asset allocation of LV=’s with-profits fund in 2012 remained broadly the same as 2011.

The table below shows the LV= with-profits fund asset allocation at the end of 2011 and 2012.

Asset Class

Allocation

31 December 2012

31 December 2011

Equities

44.8%

45.6%

Property

8.1%

8.1%

Fixed interest

40.7%

39.7%

Venture funds

4.0%

3.9%

Cash/other

2.4%

2.7%

Total

100%

100%

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Notes to editors:

Mutual Bonus

LV=’s mutual bonus was launched in 2011 and rewards eligible members for their ownership of the Society. The LV= Board considers the financial performance of LV=’s trading businesses each year along with its current and projected financial strength to determine whether, at what level, and in what form, any mutual bonus should be declared, and which members should be eligible to receive it.

The mutual bonus declaration for 2012 takes the form of an additional investment into members' with-profits funds. The bonus represents an increase of 1.1% to the value of the asset shares. Most eligible members will receive the mutual bonus when their with-profits policy matures or is cashed in. LV='s mutual bonus is not a guaranteed benefit and is at the discretion of the LV= Board.

1. WITH-PROFITS FINAL BONUS RATES AND PAYOUTS 2012

Policy duration

Policy description

Payout

Final Bonus rate

Equivalent annual rate of return
over the full term

25 years [1]

Ordinary Branch Endowment

£39,585

39.7%

7.0%

25 years [2]

Industrial Branch Endowment

£3,784

42.5%

6.2%

Notes:
[1] Regular premium of £50 per month for a male aged 30 next birthday at entry, maturing 01/03/2013.
[2] Regular premium of £5 per four week period for a male aged 30 next birthday at entry, maturing 01/03/2013.

Unitised with-profits regular premium policies

Policy duration

Policy description

Payout

Final Bonus Rate

Equivalent annual rate of return
over the full term

10 years [1]

Endowment

£7,659

28.6%

4.8%

15 years [1]

Endowment

£12,981

31.0%

4.7%

10 years [2]

Pension Policy

£34,006

25.2%

6.8%

15 years [2]

Pension Policy

£56,057

23.8%

5.7%

Notes:
[1] Regular premium of £50 per month for a male aged 30 next birthday at entry, maturing 01/03/2013.
[2] Regular premium of £200 per month for a male retiring at age 65 on 01/03/2013.
Final bonus is determined individually for unitised with-profits policies.

Unitised with-profits bonds

Policy duration

Policy description

Surrender value as at
1 March 2013

Surrender value a
year ago

Effective return over the year

5 years [1]

With Profits Growth Bond

£12.213

£11,063

10.4%

10 years [1]

With Profits Growth Bond

£18,083

£16,703

8.3%

Notes:
[1] Single premium of £10,000 for a male aged 30 exact at entry, surrendering 01/03/2013.
Final bonus is determined individually for unitised with-profits policies.

2. ANNUAL BONUS RATES

Product

Bonus rate 2012 **

Bonus rate 2011

With Profits Pension Annuity – Series 1 & 2
(see also annual top up bonus in table 3)

1.30%

1.50%

With Profits Pension Annuity– Series 3 & 4 (entry years 2007-2011)
(see also annual top up bonus in table 3)

1.40%

1.60%

Pension Income Plus Annuity *

2.25%

N/A

Tax Free Savings Plan

1.75%

2.00%

With Profits Growth Bond, With Profits Investment Bond,
Bank of Ireland Group / Liverpool Victoria With Profits Bond, MAX

1.00%

1.25%

With Profits Retirement Plan, Top Up Company Pension Plan,
Flexible Personal Pension Plan

1.50%

1.75%

With Profits Life ISA

0.50%

0.75%

Flexible Savings Plan – Series 2 *, Flexible Savings Plan – Series 1,
Regular Savings Plan, Mutual Investment Bond, Flexible Investment Bond,
Family & Legacy Fund, Mortgage Savings Plan

1.50%

1.75%

With Profits Income Bond

3.00%

3.25%

Flexible Whole Life Plan

5.54%

5.54%

Appropriate Personal Pension policies

1.81%

1.81%

Industrial Branch Life policies

1.00%

1.00%

Ordinary Branch Life policies

2.00%

2.00%

Ordinary Branch Pension policies

0.00%

0.00%

* Products open to new business
** The 2012 annual bonus rates are effective from 01/03/2013, except for With Profits Pension Annuity policies where the rates are effective from 01/02/2013. The rate for Pension Income Plus Annuity is the Declared Investment Return for policies with first anniversary dates between 01/02/2013 and 30/04/2013.

3. Top-up bonus rates for With Profits Pension Annuity

A top-up bonus is added to With Profits Pension Annuity policies increasing the basic income paid to reflect the overall return on the investment. Top-up bonuses are not a permanent increase and can be withdrawn or changed at any time, usually after twelve months. They vary by annuity series and according to entry-year. They are declared each year on 1 February.

Annuities

Entry Year

2012

2011

Series 1

2000
2001
2002
2003
2004
2005
2006
2007

21.5%
14.0%
18.0%
40.0%
50.0%
40.5%
27.5%
23.0%

18.5%
11.0%
12.5%
33.0%
42.0%
33.5%
22.0%
19.0%

Series 2

2006
2007

27.5%
15.5%

21.0%
9.5%

Series 3/4

2007
2008
2009
2010
2011

13.0%
26.0%
30.5%
26.5%
13.5%

7.5%
20.0%
24.0%
20.0%
8.5%

Further details of how LV= manages its with-profits business can be found in its Principles and Practices of Financial Management. The current version is on our website at http://www.lv.com/wp-info.

It is important to remember that past performance is not a guarantee of future returns as these depend on bonuses yet to be declared.

About LV=

LV= employs over 5500 people and serves around five million customers with a range of financial products. We are the UK’s largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.