David Hynam, CEO of LV=, a mutual life insurance, income protection, and pensions firm with over a million members, is focused on delivering value to policyholders following a period of significant financial recalibration for the 183-year-old company. Hynam took the helm three years ago when LV= narrowly avoided a sale to U.S. private equity firm Bain Capital. The proposed de-mutualization, which would have ended LV='s mutual status, failed to secure sufficient member support. Hynam's predecessor, Mark Hartigan, had advocated for the £530 million sale.
Since Hynam's appointment, LV= has improved its financial standing by reducing debt, increasing profits, and strengthening its capital reserves. He noted that while LV= has been stabilizing, other financial mutuals have grown, citing Nationwide's acquisition of Virgin Money and Coventry building society's purchase of The Co-operative Bank. The planned merger of OneFamily and Scottish Friendly aims to create a larger mutual life assurer.
"We'd been a bit distracted for a while," Hynam said, referring to the company's recent past. "There's some history that we've moved on from." He added that the focus is now on "delivering great value for members."
LV= recently distributed a record £100 million to eligible policyholders. This payout was largely from a prior agreement with Allianz, the German insurer that acquired LV='s home, motor, and pet insurance division six years ago. Allianz continues to use the LV= brand on these general insurance products under a licensing deal.
Hynam acknowledged the potential benefit of increased government interest in the mutual sector, referencing the Labour and Co-operative Party's commitment to expanding it. However, he expressed a desire for consistent policies, particularly concerning pensions, to avoid market speculation. He warned that uncertainty around pension tax-free withdrawal limits could influence individuals' financial planning.
A persistent challenge for mutuals like LV= is access to capital, as they cannot issue shares to external investors like publicly listed companies. Their funding relies on policyholder premiums, investment returns, and retained profits. "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," Hynam stated.
Financial regulations are often designed with shareholder-owned institutions in mind, leaving mutuals as a secondary consideration. Despite these challenges, LV='s brand strength, tracing its roots back to 1843, contributes to customer loyalty. The flagship with-profits fund reported a 14% return last year, benefiting from buoyant stock markets.
Approximately half of LV='s business is in savings and retirement products, with the remainder in protection plans. The company is exploring growth opportunities in the 'mass affluent' market, where AI could potentially play a role in providing basic financial advice and streamlining processes like complaints handling. Hynam is open to experimenting with AI, stating, "I don't mind if some fail... because you're not giving it a good enough go if it's always 100 per cent successful."