LV shares £38m worth of bonuses among with-profits members

Life, pensions and investments group LV saw its operating profit drop over the past year despite strong revenue growth.

The mutual’s operating profit slipped by 22 per cent year-on-year from £40million to £31million in 2021, but total trading profit surged by 222 per cent from £9million to £29million.

LV said it shared £38million worth of bonuses with eligible members over the period.

The group said it ‘Outperformed targets for sales and profitability and enhanced the sustainability of the business’. It said it also managed to double inflows into Smooth Managed Funds. 

LV said it had a ‘strengthened’ executive team with a new chief financial officer, chief operating officer and chief risk officer.

Over the past year, LV launched mortgage and rent cover and executive income protection products. 

It also ‘repositioned the business to target customers where the LV= brand and products are most competitive’.

Its present value of new business premiums came in at £1.6billion, against £ 1.3billion the previous year.

Mark Hartigan, LV’s chief executive, said: ‘LV has outperformed both our new business volumes and profitability targets with significant growth in sales and trading profit. 

‘Thanks to the progress of our plan to transform the business we start 2022 well capitalised and clear in our future plans.

‘We look forward with confidence to a sustainable future for LV= as part of a vibrant mutual sector.

‘I am pleased that we have been able to share £38million with our with-profits members through a mutual bonus of £28million and an exit bonus of £10million introduced following the sale of the general insurance business.’

He added: ‘The proposed transaction with Bain Capital was put to a member vote at a Special General Meeting in December 2021 but was not approved by members.

‘Since the vote we have listened to our members. It’s clear they value stability and security for their policies above all else and are supportive of an independent future for LV=.’

In December, LV members voted against selling the insurance mutual to US private equity firm Bain Capital for £530million.

The sale of LV=to Bain Capital had been controversial, drawing criticism from politicians across the spectrum.

LV boss Mark Hartigan had said that for the business to survive it needed to demutualise.

But some LV members had been unhappy over demutualisation and the size of payouts on offer from the deal.

The Bain Capital takeover would have meant that LV would lose its mutual status, with members given £100 each as part of the deal.

While 69 per cent of a possible 1.1million voting members were in favour of the transaction with Bain Capital, 75 per cent approval was needed for the deal to get the green light. 

Last week it emerged that LV has paid out £19million in Covid-19 claims since the start of the pandemic back in March 2020.  

The claims have covered life insurance, critical illness and income protection claims.

LV=said it paid its first Covid-related claim on 16 March 2020 and since then has paid nearly 2,000 pandemic-related claims.

This figure included 1,400 death claims, totaling £18million. For Covid death claims, the youngest claimant was just 32-years-old, with an average age of claimants of 64.