LV= has made a distribution agreement with retirement specialist Tomorrow, formerly GE Life, that will see it offer co-branded products from July with the option to acquire the business wholly in December.
Under the deal, LV= will sell co-branded equity-release and lifetime mortgages, enhanced annuities and pension products, including Sipps.
If the deal is a success, LV= can take up the option to buy Tomorrow’s new business capability from parent Swiss Re in December, which would see the business integrated into LV= from January 1, 2008. The co-branded products would then be offered under the LV= brand. It will not be taking on Tomorrow’s back book.
LV= says it would retain Tomorrow’s management, salesforce and employees, along with its Hitchin base and regional offices.
GE Life rebranded as Tomorrow in April following Swiss Re’s takeover last October, and one unnamed marketing consultant estimates the move cost it around £2m.
LV= group chief executive Mike Rogers says: “The proposed acquisition of the new business capability of Tomorrow will give us a strong market presence in three flexible retirement product sectors with an established and well regarded IFA distribution network.
“This proposed acquisition is in line with our strategic vision to expand our proposition into flexible retirement market. It transforms growth prospects for our life business and should create substantial value for members.”
Highclere Financial Services partner Alan Lakey says: “In terms of synergy, it makes sense for LV= to enhance its proposition and extend into the retirement planning sphere by swallowing Tomorrow. Sadly, both companies are image-challenged, having adopted bizarre trading names in recent months, and I fear this may weaken their potential market positions.”
Sesame research manager Dale Tranter says: “This takeover will mean a union between the two silliest name changes of recent times so LV= is quite an appropriate parent.
“It was always unlikely that Swiss Re would be interested in an open company in the long term so this move hopefully secures Tomorrow’s future while giving LV= a wider product portfolio at a stroke.”
Informed Choice managing director Nick Bamford says: “There is some synergy there because Tomorrow are retirement specialists and LV= does not have any expertise in that area . They are actively seeking something they have not got so it makes sense but because both have rebranded, most consumers would go, what?”
LV= has also set up a new strategic partnership with Marsden Building Society, which will offer LV=’s range of investment, life insurance and pension products from September through its tied salesforce.