Members

Today we have announced that we have reached an agreement on the terms of a transaction with Bain Capital Credit to acquire our savings & retirement and protection businesses.

Under the proposal, LV=’s With-profits business will be ring fenced in a separate fund and closed to new business. This will allow the fund’s capital available for distribution, including proceeds from the deal, to be distributed to its members as their policies mature.

The long-term interests of With-profits policyholders will continue to be protected by an experienced With-profits Committee.

The transaction with Bain Capital Credit is the culmination of a lengthy and rigorous Board-led strategic review to secure the best long-term future for our members.

Following the sale of the General Insurance business, it was clear to the Board that LV= would require significant long-term investment to be sustainable. Investment that if we remained a mutual, members would need to fund. Many With-profits policyholders would not see the financial benefits of these investments before their policies matured.

The partnership with Bain Capital Credit will provide LV= with the external investment needed to grow its leading brand and strong product set for the continued benefit of customers and IFAs.

Bain Capital Credit will support the LV= Board and Management’s strategic plan, which includes (i) leveraging LV=’s strong brand to expand its presence in its existing markets, (ii) innovating and refreshing the customer experience, (iii) providing significant value and on-going stability and financial strength to With-profits policyholders and (iv) continuing to strengthen LV=’s value proposition to its financial advisors.

Yes, if the deal completes LV= would no longer be a mutual. While our corporate structure will change, our culture and values will remain the same, built around putting customers, colleagues and financial advisers at the core of everything we do.

Mutuality has served us well for very many years. Following the sale of the general insurance business we are a smaller company focused on life and pensions, but with the same ambitions for growth and success. In a market dominated by global insurers, LV= requires significant long-term investment to realise these ambitions.

While our corporate structure will change, our culture and values will remain the same, built around putting customers, employees and financial advisers at the core of everything we do.

Not at all. The decision to sell to Bain Capital Credit was a strategic one designed to deliver the best outcome for our members and all other stakeholders.

We are a very well capitalised business that has been trading well throughout the pandemic and this year has grown market share and launched new products. This strength is reflected in our acquisition by a leading global investor and we are confident that we have secured a very good price.

Our strategy is working and we believe that a partnership with Bain Capital Credit recognises the opportunity to further invest to develop LV= at a time when it is well positioned, growing market share, expanding its products and trading resiliently.

We have around 1.3 million members of which 338,000 are With-profits members and 890,000 are ordinary members.

All members are expected to benefit from a cash payment to compensate for loss of mutual membership upon full completion of the transaction. Subject to progressing as currently planned this is expected to be at the end of 2021.

For With-profits members, the transaction delivers an excellent financial outcome giving them greater security:

• Removing business risk for With-profits members by releasing capital held which is no longer required to finance future investment in new business activities and ring-fencing the With-profits fund;
• Increased pay-outs – with the transaction providing up to a 40% uplift to the total capital available for distribution to With-profits members. This uplift will be subject to market performance and regulatory approval
• Fixing a schedule of administration and investment management charges.

The With-profits Committee has been extensively involved in our strategic review process and advised the board at each stage.

Yes - all members will get a vote on the transaction, subject to our usual voting criteria of being a member for 12 months.

As a result of this transaction all members are expected to benefit from a cash payment to compensate for loss of mutual membership upon full completion of the transaction. Subject to progressing as currently planned this is expected to be at the end of 2021.

In addition, for With-profits members, the transaction delivers an excellent financial outcome giving them greater security and increased pay-outs at policy exit.

As a result of this transaction all members are expected to benefit from a cash payment to compensate for loss of mutual membership upon full completion of the transaction. Subject to progressing as currently planned this is expected to be at the end of 2021.

In addition, With-profits members, as providers of capital to the business will benefit from increased pay-outs at policy exit. The precise details of how the distributions will be calculated will be taken by the Board over the coming months following consultation with the With-profits Committee.

No. The amount of money set aside for With-profits members in addition to the underlying policy value is expected to increase by up to 40% as a result of this transaction – the underlying policy values are unaffected. Distributions to members can’t start until the deal finally completes which is currently targeted for the end of 2021.

The precise details of how the distributions will be calculated will be taken by the Board over the coming months following consultation with the With-profits Committee.

The amount of money With-profits members receive will vary by type of product that the member holds, the size of their investment and the length of time until their policy matures.

As a result of this transaction all members are expected to benefit from a cash payment to compensate for loss of mutual membership upon full completion of the transaction. Subject to progressing as currently planned this is expected to be at the end of 2021.

The Board is considering this matter and no decision has been taken at this stage.

There are no immediate changes to member benefits and we will provide members with more details on our future plans for these benefits in the first half of 2021.