LV= has undergone substantial growth in the last few years and the aim of the mutual bonus scheme is to reward qualifying members[1] for their ownership of the Society and their support for the risks taken in growing and establishing the trading businesses. These include the at-retirement and protection product ranges, general insurance and asset management.
The first mutual bonus declaration will total £10million and is based on the expected financial performance of the LV= group for this financial year. It will take the form of an additional investment into members' with-profits funds, and will be added on 1 September 2011. The bonus represents an increase of around 0.5% to the value of the asset shares. It will ordinarily form part of the amount payable when there is a claim, for example when a policy matures or is cashed in early, or for annuities, it will increase the income payable alongside the 2011 annual bonus allocation. The mutual bonus scheme is in addition to the other benefits which LV='s members enjoy, including the regular bonuses that with-profits members already receive[2].
Subject to future financial performance and capital strength, LV= aims to make the mutual bonus an annual benefit for qualifying members. Therefore at the end of 2011 and in future years, LV= will review its performance and decide on the mutual bonus declaration, including who will benefit and how it will be paid. As an example, it is intended that for those members with with-profit policies, the bonus will amount to around a 1% increase in asset share in future years.
Philip Moore, LV= group finance director said: "The LV= group has made a strong start to 2011 and we are delighted to be able to launch our mutual bonus scheme and declare a £10m bonus. We are one of the UK's strongest mutuals and we intend to make the mutual bonus an annual benefit for our members subject to continued strong trading performance and positive financial outlook."
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