38 LV= Annual Report 2012
Board directors and interests A full overview of our risk management can be
The current members of the board and details of its found on page 26. Note 3 of these accounts also
various committees are shown on pages 32 to 35 provides further detail about our risk management
together with their dates of appointment. and control.
John O’Roarke is a minority shareholder in LV Internal control
Insurance Management Limited with a 1.11% The board has overall responsibility for the
shareholding and is a party to the contract for group’s internal control systems and for monitoring
LVFS to acquire the remaining interest in that effectiveness. Implementation and maintenance
company. Further details are given in note 40 of the internal control systems are the responsibility
to the Financial Statements. of the executive directors and senior management.
The performance of the internal control systems
We continued to maintain liability insurance cover is reviewed by the relevant board committees,
for our directors and officers during the year. principally the Audit Committee, which take
reports from the internal audit, compliance
With-profits bonus declaration and risk functions.
We have declared an annual bonus for the year
ending 31 December 2012 at 1% of the sum The group’s internal control systems are designed
assured for Industrial Branch business and at to manage, rather than eliminate, the risk of failure
2.0% of the sum assured for conventional Ordinary to meet business objectives and can only provide
Branch life business. Interim bonus rates will also reasonable, and not absolute, assurance against
be at these levels. Terminal bonus rates in 2012 material misstatement or loss. In assessing what
maintain our highly competitive position. constitutes reasonable assurance, the board
has regard to materiality and to the relationship
Basis of accounting between the cost of, and benefit from, internal
These accounts are presented using International control systems.
Financial Reporting Standards (IFRS), as adopted by
the European Union, drawn up on a going concern In 2012, the board undertook a full annual review
basis. The directors are satisfied that the group has of the effectiveness of the material controls, as
adequate resources to continue in business for the recommended by the UK Corporate Governance
foreseeable future and that accordingly the going Code. The review incorporated an evaluation of
concern basis is appropriate. Further details about the group’s framework and an assessment of
the directors’ responsibilities for the accounts are any significant internal control issues that were
described below. raised during the year in relation to financial,
operational and compliance risk controls. Whenever
Fixed assets any significant control weaknesses are identified
Changes in our fixed assets are shown in note 27 actions are taken, or agreed plans are put in place
of these accounts. and tracked by the board to implementation. The
system was in place throughout the year and as at
Margin of solvency the date this Report was approved.
Throughout the year and at 31 December 2012
we held the required capital resources for each Charitable donations
business class as prescribed by the Financial A full view of our charitable donations and corporate
Services Authority. social responsibility activities can be found on page
43. In 2012 no political donations were made.
Independent auditor
A resolution for the re-appointment of People employed by the group and
PricewaterhouseCoopers LLP as auditor its subsidiaries
will be proposed at the 2013 AGM. The average number of people we employ and
our total employee costs are shown in note 38
Managing risk and return of the accounts.
We look to create value for members by maintaining
an appropriate balance between the returns that we Membership
seek and the level and type of risk we take on in As at 31 December 2012, we had 1,133,000
order to achieve these returns. (2011: 1,127,000) members.
To better manage risk levels on a day to day basis We make all reasonable and cost effective attempts
a system of capital budgets is in place for each to trace and contact members if we believe their
business. Each business is expected to manage address details are incorrect. When all reminder
its position in line with its capital budget and risk or tracing techniques have been exhausted we
appetite position. maintain a record of the relevant member and,
if they have an unpaid claim, the policy remains
open for payment until we can re-establish contact.