Our future

Member payments

11 February 2021

Member eligibility criteria

Today we are announcing that the LV= Board have agreed details on the eligibility criteria for the two different payments for members as part of the Bain Capital transaction. Details on the value of these payments will be shared with members, when we invite them to vote on our proposals this year.

The first payment is a one-off member compensation payment, which will be made to all eligible members who hold an active policy when the transaction with Bain Capital completes; this is the date when Liverpool Victoria Financial Services Limited (LVFS) will transfer its business to Bain Capital. 

The second payment is for With-profits members only, where they will, on top of the member compensation, also receive an enhanced policy payout when their policy comes to an end. 

We expect the one-off member compensation payment to be made early in 2022 once the member, regulatory and legal processes have fully completed. Additionally, from that date the enhanced policy payouts will start to be made for policies coming to an end.

The actual amount of these payments will be determined by the Board after consultation with the With-Profits Committee. The Board’s decision will also be reviewed by an Independent Expert to ensure that the Board has achieved its primary aim of being fair to all members.

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What you need to know

What are the eligibility details on member compensation for the one-off payment?

This payment is for all existing eligible members, and provides member compensation in the form of a cash payment.  This one-off payment will be made to all existing eligible members with an active policy when the transaction with Bain Capital completes; this is the date when LVFS will transfer its business to Bain Capital.

To protect the interests of our current members, new business policies received from the 1 March 2021 will not be eligible for the one-off member compensation payment. 

We expect payments will be made in early 2022 once the member, regulatory and legal processes have fully completed.

Please note that the payment will be per member, and not for each member qualifying policy held.

What are the eligibility details for enhanced exit payout for With-profits members?

With-profits members will be eligible for the enhanced payout at policy exit if they hold a With-profits policy at the date of the Special General Meeting (SGM) – expected to be scheduled in the first half of 2021 - and the overall vote is in favour of the transaction. This will remain the case even if after this date your policy lapses or you leave. 

Any With-profits policies taken out from the 1 March 2021 will still benefit from the enhanced payout for With-profits members at policy exit if they hold a With-profits policy at the date of the SGM and the overall vote is in favour of the transaction. 

These eligibility criteria were discussed and agreed at Board and considered alongside advice from the With-Profits Committee who agreed the proposals were fair to With-profits members.  

More Questions and Answers

 

Can you tell me the details of the member compensation cash payment?
The amount of these payments will be determined by the Board after consultation with the With-Profits Committee. The Board’s decision will also be reviewed by an Independent Expert to ensure that the Board has achieved its primary aim of being fair to all members. Details on the value of these payments will be included in the voting pack that you will receive ahead of the vote on the transaction.
Can you tell me the details of the % uplift that With-profit members will receive as an enhanced payout at policy exit?
The amount of money that With-profits members receive will vary by type of product held, the size of their investment and the length of time until their policy ends.

The amount of these payments will be determined by the Board after consultation with the With-Profits Committee. The Board’s decision will also be reviewed by an Independent Expert to ensure that the Board has achieved its primary aim of being fair to all members.

Details on the value of these payments will be included in the voting pack that you will receive ahead of the vote on the transaction.
If I purchase a new policy from the 1 March 2021 am I entitled to any member compensation payment as a result of the proposed transaction?

New policies taken out from the 1 March will not be entitled to the one-off member compensation payment.  This is to ensure we protect the interests of our current members.

With-profits policies taken out from the 1 March will still be entitled to the enhanced payout at policy exit, providing the policy is active at the date of the Special General Meeting and the overall vote is in favour of the transaction.

Will I still have access to member benefits if I take out a new policy from the 1 March 2021?
New policies taken out from the 1 March will still benefit from access to member benefits but they will not be eligible for the one-off member compensation payment.
Are there any With-profits members who will not benefit from an enhanced payout?

Yes, there are three types of With-profits members who will not qualify for the enhanced payout at policy exit:

  • Those who have a conventional pension where these policyholders already benefit from a guaranteed yearly income. 
  • RNPFN With-profits policies which are already in their own ring-fenced fund. These policyholders may benefit from distributions made from their fund’s inherited estate in the form of either a terminal bonus enhancement or special bonus. 
  • Teachers With-profits policies which are already in their own ring-fenced fund. These policyholders may benefit from distributions made from their fund’s inherited estate in the form of either a terminal bonus enhancement or special bonus. 
I am an Equity Release customer, am I eligible for the one-off member compensation payment?
The product you hold does not qualify you for membership and therefore you would not be eligible for the one-off member compensation payment.  Your access to LV= Doctor Services and Care Navigator will not be affected, and you will still retain these benefits.
Will I still have access to LV= Doctors services from the 1 March?
LV= Doctor Services, is not classed as a member benefit and will continue as a non-contractual benefit for all new policyholders.
I already have an eligible policy with you, but I would like to purchase an additional policy ā€“ will I qualify for the one-off member compensation payment on the new policy?
The one-off payment for member compensation will be made on a per member, not a per policy basis, so you will not receive an additional member compensation payment.
What happens if my policy lapses or terminates before the date of the Special General Meeting (SGM?
If you do not hold an active member qualifying policy at the point of the Part VII transfer, you will no longer be a member and therefore you will not qualify for the member compensation.

If you do not hold an active With-profits policy on the date of the SGM, you would not qualify for the enhanced exit payout.
What happens if my policy lapses between the Special General Meeting and when the transaction fully completes (called a Part VII transfer)?
You would not be eligible for the one-off member compensation payment, as you will only receive this payment if your policy is active at the Part VII transfer date. 

However, if you hold a With-profits policy that matures after the SGM, and before the transaction fully completes at Part VII transfer date, we will retrospectively add the enhanced uplift to your policy exit value.
What is a Part VII transfer?
A Part VII transfer, also known as insurance business transfer scheme, is a transfer of business or parts of a business under Part VII of the Financial Services & Markets Act 2000. Part VII transfers are commonly used by insurance businesses to change business structures. 

The Part VII transfer is the legal step required to fully complete the transaction and occurs after members and our regulators have approved the proposals. Full details of the Part VII transfer process will be communicated to members ahead of it taking place.
How do I know if I hold a member qualifying product?
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 do I know if Iā€™m a With-profits member?
If you hold one of these policies, then you will be a With-profits member.
Can you tell me the date of the Special General Meeting (SGM)?
Full details will be in the information pack that we will share with members, when we invite them to vote on our proposals this year - we indicated at our announcement in December that this would be scheduled for the first half of 2021.