• LV= to swiftly reassess its strategic options and explore alternative ways to provide the best long-term outcome for members, the business, employees and its wider communities.
• This result will have no impact on trading; the business will continue to serve its customers as usual and member policies remain secure and protected by the same safeguards.
LV= continues to have an appropriate capital position and a life and pensions new business franchise that has an improved trading performance in 2021. However, as we indicated in our public announcements, the Board currently believes that continuing to pursue a ‘business as usual’ strategy in the longer term would not be in the best interests of our members, given the level of investment needed in our business and our declining With-profits membership base.
The Board of LV= will therefore now move swiftly to reassess its strategic options and explore alternative ways to structure a transaction that will provide the best long-term outcome for our members, as well as our business, employees and wider communities. The Board has listened to member concerns about the loss of mutuality and so will in particular explore whether mutuality can be retained either on a standalone basis without undue risk to members, or through a merger with a larger mutual organisation. The Board expects to provide an update to members as soon as it can in 2022.
We are aware that Royal London has made statements concerning its interest in further discussions which it has said might incorporate membership for some or all of our members and we expect, amongst other things, to explore such a possibility.
Alan Cook, Chairman, LV=, said: “The Board remains committed to finding a solution to the challenges presented by a declining With-profits membership base. As we have said throughout this process, the growth and investment required to remain competitive over the long-term is not a fair or appropriate burden for our With-profits members to bear. This investment would delay and potentially impact the level of returns they could expect to see, given a quarter of our members are With-profits policyholders today and we expect over the next ten years this will reduce to only 10%. Therefore, as we move into 2022, I will continue to lead the process to find a way forward that will enable us to provide the right financial outcome for all our members whilst respecting their different wishes. However, I also confirm that as soon as a way forward is agreed that I intend to step down as Chair.
“As a Board, our fundamental responsibility has always been, and will always remain, ensuring the best interests of our members. We are also deeply aware of our duty of care to LV=’s people and we will continue to do everything possible to find a solution that can deliver a continuation of the LV= brand and security for our 1,300 employees.
“The business is trading strongly and remains appropriately capitalised. As well as driving an improved trading performance, our CEO, Mark Hartigan, has delivered on the Board’s requirements throughout this strategic process. The Board continues to provide its absolute and full support to his ongoing work to address the long term challenges facing LV=.
“We want to reassure policyholders that this outcome will mean no changes to their policies or our ongoing commitment to the highest standards of service from LV=. I would also like to say thank you to our people, who have worked so hard to support our customers during this process and to our adviser network who we will continue to work closely with, supporting both them and their clients.”
The Board also wishes to emphasise that LV= continues to trade as usual, with no impact on customer policies or business as usual activity.