However, the firm cautioned this figure could drop to £60 per member if the transaction is not completed via a Part VII transfer - a type of insurance business transfer scheme which would effect LV's demutualisation - which still requires the backing of two member votes and the court.
The two votes are set to take place on December 10, in a special general meeting which was first announced in a letter published by the Financial Conduct Authority last month laying out next steps for the insurer.
Members will first vote on a special resolution to approve the acquisition of LV by Bain Capital, and then vote on the most effective way to complete the transaction through a scheme of arrangement.
Alongside the proposed £111m payment to members, LV also projected a £101m increase in “policy payout enhancements” for with-profits members in a summary of the ‘Member Vote Pack’ it published today (November 3) ahead of the votes next month.
This means the insurer anticipates total payments to members of £212m, but it went on to clarify this figure “is based on current estimates and could go up or down in the future”.
The latter figure, £101m, equates to a percentage uplift of 0.1 per cent for each year members have held their policy from 1996 until the policy pays out, according to the insurer.
This means a member holding an industrial branch whole of life policy, which is worth on average £2,000, can expect a payout enhancement of 2.6 per cent, or £52.
Those who took out one of LV’s growth or investment bonds, worth £30,000 on average, can expect a 2.1 per cent uplift, or £630.
And those in possession of flexible guaranteed bonds or funds, worth £80,000 on average, can expect a 0.6 per cent uplift, or £480.
As part of the Bain Capital transaction, the with-profits business will be placed in a ring-fenced separate fund, inaccessible to Bain Capital and closed to new business.
The insurer added that long-term interests of with-profits members “will continue to be protected by an experienced and independent with-profits committee”.
It also said “significant assets” will be set aside to support the two existing staff defined benefit pension schemes, which are the responsibility of the with-profit fund.
In the statement, Alan Cook, LV’s chairman, said: "Bain Capital was the only option that offered both an excellent financial outcome for members and gave unrivalled support for the LV brand, our people and locations.
“Whilst none of the bids would have allowed LV= to remain as a standalone mutual, this deal provides the highest distribution to with-profits policyholders compared to continuing with 'business as usual' or closing to new business.”
Pushback from MPs
LV first announced the sale of its savings, retirement and protection businesses to Bain Capital for £530m in December 2020.
In April the following year, MPs condemned LV’s sale to the private equity firm. They said the deal had been rushed and that LV had not been “open and transparent” with its members about its intentions.
In a 76-page report by the All Party Parliamentary Group (APPG) for mutuals, MPs alleged that although a deal had been agreed with Bain Capital, LV was also exploring potential sales to other non-mutuals at the same time as the company provided public reassurance to its members, which could be seen as misleading to its members.
They also said despite repeated assurances that there was no intention to alter the mutual status of the company, it was clear that plans were in place to “seek alternative arrangements” which included a change of corporate status, if not full demutualisation.
Last month, the FCA published its “non-objection” on LV putting proposals for its demutualisation to a member vote.
In a letter to stakeholders on October 26, the financial watchdog said it had “scrutinised” the fairness of the proposed transaction, as well as “the process for how it is decided”.
It added its decision to not oppose the member vote followed “extensive engagement with LV”, during which it “challenged their proposals where necessary to ensure the fair treatment of their policyholders”.
The FCA’s non-objection with regards to LV’s vote on demutualisation came with a number of requirements placed on the firm to ensure members are informed, which the insurer cited in the Member Vote Pack published today.
LV said it was providing a series of five webinars for members ahead of December 10.
It has also extended its opening hours to 8am - 7pm in the week, and 9am - 1pm on Saturday, as well as promised financial adviser briefings for clients.
ruby.hinchliffe@ft.com
