When we do well, we can give our members something extra
We started our journey in general insurance (GI) when we acquired Frizzell in 1996 - an established business, which already offered car and home insurance. From 2006 onwards we really accelerated our investment in GI; so much so that it became the 3rd largest private car insurer, the most recommended insurer and No 1 for customer service in the UK.
The success of the GI business, and the strength of our modern and vibrant brand, made the business an attractive proposition to Allianz Holdings plc. At the end of 2019 we completed the sale of the whole of the GI business to them. As part of the deal we agreed to license our brand to Allianz so they can continue to sell insurance products, backed up by a well-known and reputable brand.
It was an exciting 23 years in the GI sector and we’re pleased that we found such a good home for that business, and our former colleagues.
We recognise that we couldn’t have built such a successful business without the support from some of our members, who were exposed to the most risks during that time, so we're saying thank you by giving back some of the sale proceeds. We’re doing this via the existing mutual bonus scheme, and the newer bonus we've introduced called exit bonus.
We’re saying thank you in two ways
The bonuses will only be added to certain policies
When eligible policies end, they’ll currently receive an exit bonus of 4.75%
The exit bonus rate is reviewed annually by the LV= Board in January of each year, but it can be reviewed at other times if there is a need to. They consider factors, when deciding what rate to apply – including what funds are still available, how investment markets perform, the number of active members who are eligible to receive it and our current and projected financial strength.
Once the new rate has been agreed, it will then be used to uplift pay-outs and income for eligible policies, typically from the following 1st March. We’ll publish this rate on our website on or shortly after this date.
The Board declared an initial exit bonus rate of 5.75% in 2020 and this was maintained at the review in January 2021.
The funds for exit bonus were initially invested in cash-based assets, and strong investment returns increased the policy values over which the funds for exit bonus have to be spread which reduce the percentage of exit bonus payable. This lead to an exit bonus of 5.0% being declared from 1 June 2021 and 4.75% from 1 September 2021. Since mid-2021 the funds for exit bonus have been invested in similar assets that the main benefits for policies are invested in. This helps stabilise the exit bonus rates declared in future.
The exit bonus rate declared for 1 March 2022 remained 4.75%. This rate will continue to be used to uplift payouts and income for eligible policies until the next rate is declared, which would be on 1st March 2023 unless there is a need to review it earlier. Where pension income is being uplifted, the rate of exit bonus will be the current rate on the anniversary of when the policy started. The level of the income will then not change for a year.
We don’t add the exit bonus to guaranteed benefits, or when the underpin on conventional pension lump sum benefits is paid.
More questions you might have
These questions include which policies are eligible, how these policies benefit from the mutual bonus and the situations when they don’t.
These questions include which policies are eligible, how these policies benefit from the exit bonus and the situations when they don’t.