Market Stats & Potential

So why do people release equity?

Reason for Loan 2009-2011

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00

Treat family

Current std of living

Mortgage/debt repayment/settle bills

Medical care

IHT Planning

Home improvements

Holidays

One-off purchase

Percentage

Source: LV=

Current trends

Supporting family is a growing category:

School/university fees

House deposits

Weddings

Divorce settlements

Source: LV=

Current trends

The ‘luxury purchase’ is showing signs of recovery:

Purchase of holiday home/caravan/motorhome

Property development

Financing business ventures

Extended holidays

Source: LV=

Unusual cases

And some of our more unusual cases…

Face lift

Cosmetic dentistry

Solar panels

Charity rally driving trip

Source: LV=

Case study – property purchase

Pension not enough to cover regular bills

Still working part-time

Had a fall – unable to maintain property

Retirement development – great location and support package available

Needed cash to make up shortfall in purchase price

Simultaneous purchase and release of equity

Case study – delaying moving home

Properties in UK and Portugal

Income from overseas property reduced

Cost of UK healthcare insurance increased, value of shares decreased

Unwilling to sell either property at a loss

Cash released has paid healthcare premiums and offset loss of income from overseas property

Case study – helping grandchildren

Inherited property – needed external and internal works

Wished to contribute towards grandson’s school fees

Took a larger initial sum to pay for work to property

Releases smaller tranches to pay each term’s fees

How has this market performed?

Year Volume of plans sold

Value of plans sold (£m)*

2005 24,392 1,104

2006 27,772 1,154

2007 29,293 1,210

2008 28,224 1,096

2009 20,493 946

2010 17,574 804

2011 16,095 789

Key points:Peak in volume and value 2007Followed by mortgage ‘crash’ of 20082009- introduction of drawdown arrangements2011 – total value of plans is down slightly over 2010, but the final two quarters showed a strong recovery. In fact, the Q4 performance was the strongest for two yearsThe green shoots of recovery?

* Assumes house prices remains static Figures from Mintel Equity Release Report, May 2011 and SHIP press release January 2012

And the future?

Key pointsSHIP, lenders and advisers alike are working very hard to raise profile of equity release

Increasing recognition that ER needs to be one of the cornerstones of retirement planning

We believe the future is bright for equity release

* Assumes house prices remains staticFigures from Mintel Equity Release Report, May 2011Note that the 2011 figure used here was Mintel’s estimate only and they have used this to project forward to 2015. 2011 figures were lower than estimated

Year Volume of plans sold

Value of plans sold (£m) *

Percentage change(value of plans)

2005 24,392 1,104

2006 27,772 1,154

2007 29,293 1,210

2008 28,224 1,096

2009 20,493 946

2010 17,574 804

2011 16,095 789

2012 23,748 986 +14%

2013 25,744 1,062 +8%

2014 27,701 1,131 +6%

2015 28,322 1,152 +2%

Future market potential

So, why do we think the future is bright?

UK population will continue to expand and age, putting further pressure on public funds

Lower than expected investment returns

Low pension participation and falling annuity rates

Rising cost of care

Longer life expectancy

Property prices can generally be relied on to grow over the long term

The market has changed

There is no longer a single market for equity release ‘but rather several markets, defined by different customer, product and advice needs’

Six main customer types:

55+ with long term care needs (ineligible for state-funded care)

Vulnerable low-income older homeowners with debts (‘last resort’ cases)

Low-income older homeowners struggling to make ends meet

Newly retired with adequate income and high lifestyle expectations

Approaching/in retirement and financially comfortable (‘aspirational’ cases)

High income, high asset base looking to mitigate tax liability

Source – SHIP & Mintel Equity Release Report, May 2011.

Product innovation

Innovation essential to stimulate market recovery

Focus on ERCs

Inheritance protection

Interest repayments

Flexible drawdown options

Additional guarantees

Impaired lives

Reduced minimum ages

Mix and match

Intermediaries play a vital role

Source – SHIP (Mintel Equity Release Report May 2011 and SHIP 2011 year-end figures)

Share of Equity Release Sales by Distribution Channel

5363 63 67

7889

4737 37 33

2211

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011

Year

Per

cen

tag

e

Direct

Intermediary

Any questions?

About LV=

For financial adviser use only.

Not to be used after 5 April 2012

LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX.

LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.

21223709 01/12

About LV=

For financial adviser use only.

Not to be used after 5 April 2012

LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX.

LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.

21223709 01/12

About LV=

For financial adviser use only.

Not to be used after 31 July 2012

LV Equity Release Limited, Keynes House, Tilehouse Street, Hitchin, Herts, SG5 2DX.

LV= is a registered trade mark of Liverpool Victoria Friendly Society Limited and a trading style of the Liverpool Victoria group of Companies. LV Equity Release Limited is registered in England (No 1951289) and is authorised and regulated by the Financial Services Authority (register number 306287). Registered address: County Gates, Bournemouth, BH1 2NF. Tel: 01202 292333.

21223709 01/12