LV= has paid a record £100 million to its members as the mutual life insurer continues its recovery from a near-collapse triggered by a failed attempt to sell the business to US private equity firm Bain Capital.
David Hynam, chief executive of the 183-year-old firm formerly known as Liverpool Victoria, said the payout reached 250,000 eligible policyholders. The bulk of the money was a final payment from a deal with German insurer Allianz, which bought LV=’s home, motor and pet insurance arm six years ago.
Hynam took charge three years ago after his predecessor, ex-Army colonel Mark Hartigan, attempted to sell the mutual to Bain Capital for £530 million. The de-mutualisation required enough member support to proceed but failed following a campaign led by the Daily Mail and The Mail on Sunday. The deal collapsed almost five years ago.
Back on track
Since taking over, Hynam has slashed debt, grown profits and strengthened LV=’s capital cushions. He said he has also “brought some pride back” to the mutual, which has more than one million members.
“I don’t get up in the morning thinking the big thing ‘I’ve got to fight for independence’,” Hynam said. “I think ‘We’ve got to deliver great value for members’.”
The recovery has come while other financial mutuals have grown significantly. Nationwide has swallowed Virgin Money. Coventry Building Society now owns the Co-operative Bank. OneFamily and Scottish Friendly plan to merge, which would create a mutual life assurer with 2.3 million members.
“The world has moved on a bit” in the past three years, Hynam said. “We’d been a bit distracted for a while. There’s some history that we’ve moved on from.”
Performance and products
Half of LV=’s business is in savings and retirement products, including annuities and equity release plans, which have seen good growth. The rest covers protection plans such as life insurance and critical illness cover. The mutual’s flagship with-profits fund returned 14 per cent last year.
LV= products are mainly sold through a network of regulated financial advisers, but Hynam said unregulated or guided advice represents a major growth opportunity as providers compete for the mass affluent market. The company is also trialling artificial intelligence for complaints handling.
“I don’t mind if some fail,” Hynam said of LV=’s AI pilots. “You’re not giving it a good enough go if it’s always 100 per cent successful.”
Brand strength
LV=’s strong brand has also supported its recovery. Allianz, which reversed plans to drop the LV= name from the general insurance products it bought in 2019, recently signed a licensing deal to continue using it.
“It’s a very valuable brand, one of our biggest assets,” Hynam said.
LV= traces its roots to 1843, when it was set up in Liverpool to help the poor pay for their funerals.
Political backdrop and capital constraints
The political environment has also shifted. Andy Burnham has become Labour and Co-operative Party’s first Prime Minister after pledging to double the size of the mutual sector.
“It’s great to have somebody who has got an interest in the co-operative and mutual sector,” Hynam said. “That’s always going to be useful for us.”
He also called for “consistent policies that customers can relate to,” particularly on pensions. Tax-free cash withdrawals from pension pots surged ahead of last year’s Budget on speculation that the £268,275 limit would be cut. It was not, but Hynam said he wants to avoid a repeat of damaging speculation before Burnham’s first Autumn Budget.
“If the tax-free allowance for pensions was withdrawn, or threatened to be withdrawn, people will behave differently in their tax planning,” he warned.
Hynam also highlighted a structural challenge facing all mutuals: unlike shareholder-owned firms, they cannot issue shares to raise capital and must instead rely on policyholder premiums, investment returns and retained profits. Financial regulation, he noted, is designed largely with shareholder-owned banks and insurers in mind, leaving mutuals as an afterthought.
“I don’t think anyone has come up with an idea yet as to how mutuals can have access to capital when you can’t basically own a share,” he said.
