Film 2: The financial outcomes for members - Mark Hartigan, Chief Executive
Length: 6min 30sec
Here are four separate film clips from the Event
Length: 6min 30sec
Length: 8min 1sec
Length: 10min 22sec
Length: 1min 22sec
No. Following the sale of the General Insurance business we set aside an amount of capital to distribute to With-profits members. As a result of the transaction with Bain Capital, it is this amount which has increased by a further 40%.
The actual amount of money each With-profits member receives will vary based on a number of factors - the type of product they hold, the size of their investment and the length of time until their policy matures – which will result in a different outcome for each members’ terminal/exit bonus.
Mutuality has served us well for many years but we simply can’t make it work any longer for our business model given the scale of additional investment that would be required and time required to deliver growth. It has taken nearly 12 years for members to see a full return on their investment in the general insurance business and the vast majority of today’s With-profits policies will mature within the next eight or nine years.
The Board carefully considered a wide range of strategic options and proposals supported by independent financial and legal advice and in consultation with the independent With-Profits Committee.
During the strategic processes confidential information is shared between the parties, which is why everyone concerned signs confidentiality agreements. This means it would not be right or proper for us to disclose details on any of the other parties that took part in our process or what their plans were for LV=.
It is the Board’s duty to take action in the best interests of all members. At the end of the process the Board was unanimous in its decision that the transaction with Bain Capital presents an excellent financial outcome for our With-profits members as well as offering an unrivalled commitment to LV=’s future prospects, business and our people.
There was also no transaction being offered which would have allowed members to retain similar membership rights to those that they have today and no transaction under which With-profits members would have been likely to benefit from stronger governance arrangements, more access to distributions or a better cost structure.
First and foremost, all eligible members will benefit financially from the transaction.
With-profits members will benefit from a With-profits fund that is ring-fenced from new business and existing non-profit business and the associated risks.
With-profits members will continue to benefit from independent oversight from the existing With-Profits Committee as they do today.
There are no immediate changes to the overall business strategy or the management team. While Bain Capital Credit will be the ultimate owners of LV=, the management team will be responsible for the day to day running of the business under the direction of the Board.
There will be no changes to the fund charges as a result of this transaction. Under the terms of the transaction there will be a fixed schedule of administration and investment management charges.
There are no planned changes to the asset mix. As happens now we regularly review the asset allocations and ensure that it is still appropriate for the current market conditions, outlook, and the profile of our With-profits business. The With-Profits Committee and the Investment Committee will continue to provide independent oversight.