Members

Sharing our future plans with you

This deal follows a Board-led, comprehensive and rigorous strategic review asking the question ‘What is best for our members?’

As a standalone life and pensions company we have big ambitions for growth focused on growing the LV= brand and business to further develop as a major force in the UK life insurance market. However, in a market dominated by global insurers, LV= requires significant long-term investment to realise these ambitions.

The scale of this investment, together with the time needed to deliver growth and the age of our With-profits policies means that many With-profits members would not see the rewards before their policies mature.

The Board were unanimous in their decision.

The deal with Bain Capital delivers an excellent financial outcome for members plus greater security for With-profits members.

The deal will see Bain Capital, a leading global investment firm with extensive insurance industry expertise, purchase the LV= business. This means we would no longer be mutual in structure. However, the deal provides an excellent financial outcome for members and greater security for With-profits members. We’ll also secure external investment to fund our ambitious growth plans and maintain the independence of our long-established and well-respected LV= brand.

Our culture and values won’t change.

While we will no longer retain our corporate structure as a mutual, our culture and values will remain the same. We will continue to put customers, employees and financial advisers at the core of everything we do. Bain Capital is fully bought into what LV= stands for and is committed to our plans and strategy for growth. Together we are excited by the opportunities that lie ahead in this next phase of LV=’s journey.

 

Looking out for our members’ best interests – what it means for you.

Throughout the strategic review the Board of Directors took advice from legal and financial advisers and the With-profits Committee. If, and once, the transaction has been fully completed all members will benefit from a cash payment to compensate for loss of mutual membership… and if you are a With-profits member you will also see an increase in pay-out when your policy comes to an end.

Members will be able to have their say.

We’ll write to all our eligible members inviting them to vote on our proposals at a Special General Meeting (SGM).

The Board will recommend that you support the sale of the business to Bain Capital. We are working hard to finalise plans and dates for the Special General Meeting and distribution of the member pack. The member pack, which will be sent out ahead of the SGM, will outline all of the key information members will need to inform their vote.  We will announce the dates once they are confirmed and full details will also be published here.

Once we’ve consulted with our members and the vote has taken place, the transaction is subject to a legal process and approval from our regulators - the Prudential Regulation Authority and Financial Conduct Authority before being finalised.

More about Bain Capital

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

The transaction is with Bain Capital Credit which is a leading global private investment firm. Bain Capital Credit invests across a number of industry sectors and the Bain Capital team leading the LV= transaction have particular extensive experience working with insurers.

It has been a leading investor in the UK for the past fifteen years investing hundreds of millions of pounds in a range of different businesses to support strong management teams grow their businesses.

Here are some more questions you might have about the deal

What exactly are you announcing?

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.

Why is LV= doing this and why now?

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.

What are Bain Capital’s plans for LV= in outline?

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.

Does this mean LV= is demutualising?

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.

You have always made a big deal about your mutuality, why are you abandoning this now?

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.

Is LV= in financial trouble and has this been triggered by the pandemic?

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.

What makes someone a member of LV=?
Anyone can become a member of LV= by owning a member-qualifying product with us. This includes all of our current and historic products, apart from our equity release products (for example Lifetime mortgage and Flexible Lifetime mortgage). Customers who have general insurance products (for example car and home insurance) are also not members - these products are sold by LV= General Insurance Group, a subsidiary of Allianz.
How many members do you have and how many are With-profits members?

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

Why is this deal in the best interests of 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.
How involved have the With-profits Committee been and what’s their view?

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

Will members get a vote on the transaction?

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

Will members get a windfall payment and when? What will this be?

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.

Find out the latest news on member eligibility payments 

Can you explain why members will be getting different distributions?

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.

Find out the latest news on member eligibility payments 

If the funds’ capital is expected to increase by up to 40%, does that mean With-profits members will get 40% more?

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.

How much, on average, will members of the With-profits fund get?

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 ends.

What is the payment all members will get?

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.

Find out the latest news on member eligibility payments 

If I cancel my policy, I die or my policy matures before the end of 2021 will I still get the compensation payment?

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

Find out the latest news on member eligibility payments 

Will members keep their existing member benefits?

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.

More on membership

Current member benefits

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Mutual bonus

Find out more about how we reward eligible members.

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