LV is set to convert 3,000 investors into with-profits policyholders over the next few weeks, taking its with-profits membership up to more than 270,000.
Starting in the second quarter of 2022, investors in its Smoothed Managed Funds range will automatically convert to with-profit members.
This will initially add around 3,000 policyholders to LV’s with-profits fund, meaning its with-profit member total now sits at 274,000.
The numbers entering the with-profit fund will rise as the Smoothed Managed Funds range generates more business.
“We expect Smoothed Managed Funds investors will become the dominant part of our overall with-profit fund", said Clive Bolton, LV’s managing director of protection, savings and retirement.
Last month, LV announced a distribution partnership with Embark, which will see the pensions and retirement specialist establish a range of modelled portfolios through an LV-branded, Embark-linked service built around these smoothed funds.
Bolton said: “It makes complete sense to ensure all our Smoothed Managed Funds policyholders, as the next generation of with-profits members, can now start to share in all elements of the future profit potential of LV as a standalone life business in a vibrant mutual sector.”
In April 2021, LV launched its latest version of Smoothed Managed funds. While the mutual had been managing these types of funds since 2012, it was this latest fund which helped it restart growth.
Between 2017 and 2020, LV’s with-profit membership base had dropped by more than 40 per cent. These members have access to LV’s fund surplus via a mutual bonus, whereas non-profit members - e.g. protection customers - have voting rights but no access to LV’s profits.
The issue a few years ago, Bolton explained to FTAdviser last month, was that LV’s old endowment policies were maturing and the mutual was not selling enough with-profit funds to replace those.
“Now with-profit funds are growing again, so they’re a better long-term investment,” said Bolton.
Back in 2020, LV had projected a further 60 per cent fall in member numbers over the next 10 years due to slow growth.
The Smoothed Managed Funds range doubled its inflows last year and currently offers levels of risk rated at 3, 4 and 5.
Like Prudential’s PruFund, LV’s smoothed funds range is designed to ride out volatility - making it particularly popular during a global pandemic, according to LV.
ruby.hinchliffe@ft.com
