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Mutual bonus scheme

Rewarding our members

Large green heart

Rewarding our members

LV= is a mutual insurer which means we're owned by our 1.1m members. The LV= mutual bonus was introduced in 2011 and rewards eligible members for their continued investment in the Society.

Each year the LV= Board considers whether to declare a mutual bonus and, if so, the level and form of the bonus and which policies should receive it. This takes into account:

  • the performance of LV=’s trading business in life and general insurance;
  • LV=’s capital position; and
  • the contribution to LV= made by various groups of policies (for example, the risks taken by them in supporting the establishment and growth of LV=’s trading businesses).

Most eligible members will receive the mutual bonus when their with-profits policy ends. The LV= mutual bonus is not a guaranteed benefit and is at the sole discretion of the LV= Board. Previously declared mutual bonus can only be taken away in exceptional circumstances, for example if it were required to protect our financial strength.

2017 mutual bonus £26 million

Our performance in 2017 has enabled us to allocate a discretionary mutual bonus of £26 million (2016: £17 million). We have applied the mutual bonus by uplifting the asset share of relevant policies as follows:

Policy group

Uplift % 2017

Uplift % 2016

Conventional with-profits policies and with-profits annuities

1.0%

0.5%

Accumulating and unitised with-profits policies except Flexible Guarantee policies

1.0%

0.5%

Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1

0.5%

0.5%

Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2

0.0%

N/A

The different enhancements applied for 2017 reflect the contribution to the Society made by these different groups of policies. For Flexible Guarantee Bonds Series 3 and Flexible Guarantee Funds Series 2, the mutual bonus has been declared at zero, however this does not mean that these plans will never receive a mutual bonus.

Since the launch of the mutual bonus in 2011, LV= has allocated a total mutual bonus of £155 million to eligible member policies.

The 2017 mutual bonus will typically add the following to eligible with-profits policies assuming they are currently worth £10,000:

Policy group

Addition

Conventional with-profits policies and with-profits annuities

£100

Accumulating and unitised with-profits policies except Flexible Guarantee policies

£100

Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1

£50

Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2

£0

It will form part of the amount payable when the policy matures, pays a death claim or is cashed in, except for eligible annuitants which receive an increase in their income. For most with-profits policies it is added by increasing any final bonus or top-up bonus (or reducing any Market Value Reduction) that otherwise would be paid.

Here is a summary of our mutual bonus declarations to date.

Mutual bonus declaration

Uplift to payouts

2011

£18.6m

1.0%

2012

£20.9m

1.1%

2013

£22m

1.0%

2014

£24m

1.0%

2015

£27m

1.0%

2016

£17m

0.5%

2017

£26.2m

Conventional with-profits policies and with-profits annuities

1.0%

Accumulating and unitised with-profits policies except Flexible Guarantee policies

1.0%

Flexible Guarantee Bonds Series 1 and 2 / Flexi Guarantee Plan / Flexible Guarantee Funds Series 1

0.5%

Flexible Guarantee Bonds Series 3 / Flexible Guarantee Funds Series 2

0.0%

The policies that we acquired from the Royal National Pension Fund for Nurses (RNPFN) in 2001 or Teachers Assurance in 2016 are not invested in the LVFS with-profits fund, so these members are not included in the mutual bonus scheme.