Our Accounts 123
Notes to the financial statements continued
31 December 2012
47. Related party transactions (continued)
d) The following transactions have taken place between the Society and other group companies:
2012 2011
£m £m
Management charge by the Society 191.1 186.8
Investment management charge to the Society - (7.9)
Reinsurance ceded by the Society - claims recoveries - 47.9
Reinsurance ceded by the Society - premiums paid - (31.5)
Deferred margin (included in other financial liabilities) 10.1 5.6
Beneficial interest of subsidiary in loans sold to the Society 225.6 90.4
Intra-group loans - net interest received by the Society 5.8 3.8
Balances outstanding between the Society and other Group companies:
2012 2011
£m £m
Payable by the Society (52.8) (43.3)
Receivable by the Society 87.4 109.6
Loans owed to the Society 351.7 396.6
e) Loans to related parties
Loans owed to the Society represent a subordinated loan of £nil (2011: £183m) to Liverpool Victoria General Insurance Group Limited,
secured loans of £51.7m (2011: £51.4m) to Liverpool Victoria Equity Release Limited and two new loans of £130m (unsecured
subordinated loan) and £170m (unsecured senior loan note) to LV Capital PLC issued on 21 December 2012. All these loans are
disclosed within loan stock in Note 29.
In addition the Society has a loan of £nil (2011: £162.2m) to Liverpool Victoria Equity Release Limited designated at fair value through
income disclosed in Note 15. This loan was repaid in December 2012 as part of the loan restructure with the Society.
Statements and Reviews
In March 2013 the remaining loan balance of £51.7m to Liverpool Victoria Equity Release Limited was repaid.
The subordinated loan to Liverpool Victoria General Insurance Group Limited bore interest at 1% above UK six month LIBOR and was of a
medium to long-term nature, this loan was repaid in full in December 2012.
The terms of the loans to LV Capital PLC are:
(i) A £130m unsecured subordinated loan note repayable in 2015 with an interest rate of LIBOR plus 8.5%.
(ii) A £170m unsecured senior loan note repayable in 2047 with an interest rate of 9%.
LV Capital may, subject to one month’s notice and obtaining written agreement of the Society repay all or part of these loans.
In addition to the loan notes disclosed above a £300m loan note was issued to LV Capital PLC by the Society on 10 December 2012 and
Our Businesses
subsequently cancelled on 21 December 2012.
The loans to Liverpool Victoria Equity Release Limited have fixed interest and repayment terms established at the outset of each
advance.
On 30 November 2011 the Critical Illness and Income Protection reinsurance agreement between the Society and Liverpool Victoria Life
Company Limited was terminated. Assets totalling £34.4m were transferred to the Society in settlement of £91.8m of insurance contract
liabilities less the value of the estimated future profits for the business stream. A loss of £0.7m was recorded in the Statement of
Risk Management
Comprehensive Income as a result of this transfer.
48. With-Profits Actuary
The following information has been provided in accordance with section 77 of the Friendly Societies Act 1992.
a) The With-Profits Actuary of the Society until 16 February 2012 was Mr P M Downey, who is employed by Liverpool Victoria Friendly
Society. The total emoluments of Mr Downey during this period on a pro rata basis were £23,604 (2011: £175,312) including car
allowance and medical benefits. Mr Downey is a participant in the Society’s long term incentive plan and holds one insurance policy
Corporate Governance
issued on normal staff terms by a subsidiary of the Society.
b) On 16 February 2012, Mr N J Dumbreck took over as the Society’s With-Profits Actuary from Mr P M Downey. Mr Dumbreck is a
Principal with the London office of Milliman LLP, an external consultancy firm. The Society paid fees of £388,491, inclusive of VAT and
expenses, to Milliman LLP during 2012 in respect of Mr Dumbreck’s professional services. It also paid fees of £54,000, inclusive of
VAT and expenses, to Milliman LLP during 2012 in respect of services unrelated to Mr Dumbreck’s role as With-Profits Actuary.
c) Mr Dumbreck held four insurance policies issued on standard terms by one of the Society’s subsidiaries. He had no other pecuniary
interest in any transactions with the Society at any time during the year.
Our Accounts