We held a Special General Meeting on 22 May 2019. Here's what happened:
Total member votes
97,099 members voted
93.3% votes in favour
Total member votes
94,736 members voted
94.5% votes in favour
And since then...
It was over to our regulators to approve the plans.
They've now completed this phase and agreed we can convert.
The final stage is for Companies House to register us as a company limited by guarantee and issue us with a new company registration number. We expect this to all happen in January 2020.
View video transcript
Good afternoon everyone
Thank you a lot for coming
It’s a big deal, we’re at one end of the country and some of you have come from the other end of the country, and it really is appreciated.
This is probably not the longest meeting you’ve attended here at LV= but it certainly is one of the more significant, and so for that we really appreciate your attendance.
As you know, we would like to make some important changes that we as the board think will help us build on our heritage and successful brand.
The intention is to create an even stronger mutual insurance company for the future. One that will work better for all members as well as for LV=.
So, in a moment, I’m going to be asking you to consider two proposals and to cast your vote.
These are as follows:
The first vote is to the conversion of the company to a company limited by guarantee, and also an amendment to our rules to clarify who benefits from membership of LV=.
In order to have more flexibility and freedom to compete in the future we want to make these changes to our business.
Firstly, as you know, LV= is a friendly society and because of this we’re governed by the Friendly Societies Act. We’re the largest, if not the only significant friendly society left in the UK.
And many of the acts provisions are, to be frank, out of date and they restrict our ability to manage the business effectively and as a result in the best interest of you, our members.
So, we want to convert from a friendly society to a company limited by guarantee.
What that actually means is that we will then be governed by the Companies Act rather than the Friendly Societies Act and that will give us greater ability to complete in today’s marketplace, because all the companies we compete with are governed by the Companies Act.
So, it levels the playing field with our competitors as a result.
As a result of this change we will still be a mutual and there are no changes to your policy conditions and benefits, or to the financial security of LV=.
We want to remain (I’m going to keep saying this), we want to remain a mutual insurance company so that we can continue to deliver value for our members for many years to come.
But secondly, we want to make a change to our constitution to clarify who will benefit from being a member of LV= in the future.
We were actually founded in 1843 and like other long-established insurers, some of our policies have you been in existence now, for a long time.
Over the years we have lost contact with many of these members because they have either moved house or even passed away and we have not been informed.
We’ve been working hard to find as many of them as possible and reunite them with their policies. But realistically, this isn’t always going to be possible.
So we therefore want to amend our constitution to clarify what happens if we can’t get back in touch with people.
Where we hold insufficient contact information or we believe the individual has died after a period of time, and a number of attempts have been made to contact them, then membership entitlement will be removed until such time as the person re-establishes contact with LV=, when of course their membership would then be instantly reinstated.
However of course their policies and their policy benefits would not be affected.
We believe that this would then mean our membership base was more accurate so that every active member who wants to make their voice heard can do so.
And importantly it also ensures that we can comply with the requirements of the Companies Act.
Now in developing these proposals we have worked with a range of experts.
As you would expect, our regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (which is part of the Bank of England) have been heavily involved.
And if you vote in favour of our planned conversion, we will need the PRA (the Prudential Regulation Authority) to confirm our plans before we can apply to Companies House to register as a company limited by guarantee under the name Liverpool Victoria Financial Services Limited.
Our plans have also been scrutinised by an independent expert, Oliver Gillespie from Milliman who has written a report which was available to members.
Tamsin Abbey, who is our with-profits actuary, has also advised the board on our plans. Both Tamsin and Oliver are with us today, sitting on the front row.
And just to make sure you know who they are
You’ll come to discover that Oliver is a very precise man – leaves no fact unturned. They are with us today and we are grateful for you to be here, and we made sure your photographs are on the screen just to make sure everybody knew who you were anyway.
So in addition we’ve sort the views and support of the With-profits Committee and the Royal National Pension fund for Nurses (RNPFN) which is one of our subsidiaries’ supervisory board who advise the board on with profits issues.
The concept of mutuality and the importance of membership are at the heart of LV=.
Your board and executive team are committed to preserving our mutuality (there, I’ve said it again).
We think I can be an area of competitive advantage for us and we think we can do more to demonstrate the benefits of being a member of a mutual insurer than perhaps we have done in recent years, so a redoubling of our efforts is very much on our radar.
Importantly as a member you also have a say in how LV= is run and we need your support to make both these changes happen.
I believe they provide the foundations from which we can build a better mutual for the future where being a member has more meaningful benefits. I hope that you feel able to vote in favour.
But before you vote, I’d now like to pass you over to out Chief Executive, Richard Rowney, who will open the floor to questions.
RR: Thank you Alan. So, if you do have a question if you raise your hand, I believe the team have microphones and will come to you and I will field your question appropriately.
Q1: What is the size of the lost members funds? Is it a significant amount or is just because you have a duty to trace the members?
Primarily, obviously we do have a duty to trace the members. Interestingly when we looked at the demographics almost of the members that we couldn’t trace – we have approximate ages for most of them, actually a lot of them have probably died so that means the number is lower.
In terms of the actual liability that attaches to the untraced members, I don’t have the precise figures but it will be over one hundred million.
RR: Are there any other questions?
Q2: As a mutual going ahead, which I think is obviously, like most others here, a very sensible move, would you compare the new LV= to a conventional building society, bearing in mind we’re supposed to be competitive with such organisations, or if not how different will the new LV= be?
Andy: So I think there are some parallels between us and a building society in terms of the mutuality. I think what we want to be is effectively an organisation that it there working for our members and providing benefits back to our members. So that’s very much the aim of what we’re trying to do.
But obviously verses the building society, we’re in quite a different field so I think that’s probably the main difference.
Alan: I think I made a reference in my few words. I think where the parallel applies, I often use the example of Nationwide, where I think they have done a better job of, not exploiting, but putting forward that they are a mutual as part of their proposition to their customers. And we’ll still be constructed just the same as them, and I think we could do better in exemplifying the benefits: you know, that we’re not paying shareholders, you know all that sort of stuff. It’s a little bit esoteric. I mean Nationwide don’t pay a higher interest rate because they are a mutual but they still, I think, get more good will by being a mutual than we have necessarily enjoyed here. I’m mostly preaching to the converted here, but to the wider population I think we could make more of our mutuality. So I wouldn’t call it a new LV= I’d just call it a rebooted, to use a common parlance, I think we could just go at it again a bit harder and make more of it.
If you’re going to follow up with your third question and ask me what that is? I don’t know what it is but I think that would be a good aim for us to have as we come out of the other side of this conversion
RR: I think there was a question at the front.
Q3: Just some guidance on, because at the moment we are looking at conversion and I know assuming this afternoon is a successful outcome what is the boards view of when the conversion will become affective? Taking into account that we’ve got to go through the law courts, we’ve got to apply for scheme of arrangement etc etc.
Andy: In terms of the timeframe and some of it is sort of out of our hands because obviously of the back of today, assuming we get a positive vote today on conversion, that goes into the PRA and the PRA are the main arbiter in terms of the conversion process.
Assuming they are comfortable as well, and that is timed to take place during June. So their process runs during June.
We would then seek of the back of that, assuming that is then positive, to put an application in to Companies House to get ourselves converted to a company limited by guarantee.
So that whole process we would expect to conclude some time in August.
There are elements of that, that are slightly outside of our control because it’s around how quickly our regulators move and then how quickly Companies House then process our application.
But that’s the timeframe.
The other stages that you referred to in terms of schemes of arrangement, that would very much be a stage two and actually until we have completed this conversion to a company limited by guarantee we cannot move forward with a scheme of arrangement because you have to be a company for that and today we are a friendly society.
Alan: OK without overdoing it, as I’m sure you appreciate the votes today are very significant for your society and so therefore we’re going to vote on each resolution by way of a pole.
Now we’ve already had a significant number of members voting by proxy vote and I hold those proxies and they will also be included in the final tally.
Now for those of you who have been to our AGM’s before you may be used to a process of a show of hands, but that just isn’t good enough for a proposition like this and so we’re going to change that process to a physical vote and I’m going to get Mike to explain how this works.
[Handover to Mike]
So you will have received a copy of the full resolutions that we are voting on as part of the (information) pack sent in advance of this meeting.
So I wasn’t proposing to read the text of each resolution in full now.
But if you’ve have not had the opportunity to see the resolutions, please let one of our team know, standing at the back and they’ll be able to provide you with a copy in a moment.
We would ask that you complete each of the two voting cards that were supplied to you at registration desk earlier. Please make sure that you have indicated how you wish to vote on each of the two resolutions, and please sign the card on the space provided.
Once you have completed the cards, please could you keep these and one of our staff will collect these from you shortly. The vote is being overseen by the Electoral Reform Service who are with us in the room today and they will be counting the votes.
If anyone has misplaced a poll card, please let one of our team know so we can arrange for a replacement to be given to you.
So please feel free to vote now and complete your cards. There will be a short break whilst the votes are being collected and counted and we will call you back when we are ready to announce the result of the vote.
Alan: So the one thing I’m absolutely clear on is we’ve definitely counted this properly, so apologies that took as long as it did but we’re there now.
So we had two votes. Vote 1 we have a total of 97099 votes – that’s the total number of votes. That’s a turnout of 8.8%. Now our typical turnout for an AGM would be about 5% so we’re quite pleased about that because it shows that many people who wouldn’t normally vote have taken the trouble to get engaged.
The votes in favour were eighty-nine thousand so it’s a 93% vote in favour of vote one.
So 93.26% is exactly what it says on that piece of paper.
96.26% in favour which is very pleasing.
I think actually it’s as pleasing that it’s the number of people who have voted as well which is higher, and one of the things the Bank of England, the Prudential Regulation Authority were interested in was, ‘was it a representative vote? Did people get engaged’ so we’re pretty pleased about that.
Vote 2 follows a similar pattern. 87797 in favour and just over five thousand against which is a 94.5% vote in favour.
So we’re very happy that that’s the view of membership so that enables us to go to the next stage. We will have a board meeting later this afternoon where we will formally receive those votes, and then, without wishing to pre-judge my colleagues, I’m assuming will take the decision to apply to the PRA to undertake the conversion and follow the sort of time table that Andy talked about.
That brings us to the end of these formal proceedings. Thank you very much for attending and voting in person.
So I very much look forward to updating you on our continued progress and success in building a better future for your mutual. For those who that attend we’ll be holding our Annual General Meeting here on the 26th July and I look forward to seeing many of you again then. Meanwhile have a safe journey home. Thank you very much everyone.
View video transcript
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