What could plans for the takeover of LV= mean for members?

Concerns about LV=, whose history stretches back 178 years, potentially being sold to Bain Capital have been mounting.

Vicky Shaw
Thursday 11 November 2021 13:28
A battle around proposals for LV= to be sold to Bain Capital has intensified in recent days (Dominic Lipinski/PA)
A battle around proposals for LV= to be sold to Bain Capital has intensified in recent days (Dominic Lipinski/PA)

A battle around proposals for LV= to be sold to Bain Capital has intensified in recent days.

Here is a look at what is happening and what it could mean for members:

– What is LV=’s history?

With some 1.2 million members, LV=’s roots stretch back 178 years, when it helped those living in poverty afford a funeral.

Members hold a variety of products with it, including investments and retirement income products.

Last year, it announced proposals for Bain Capital to acquire the LV= life and pensions business.

– What is Bain Capital’s background?

Founded in 1984, US firm Bain Capital has around £110 billion of assets under management and offices around the world.

– Why are changes being proposed?

LV= says the competitive life and pensions market is being driven by big insurers with access to capital.

It says it would need significant investment to be able to compete effectively, particularly with the rapid change in technology and digital services that customers expect nowadays.

As a mutual, it says it has limited access to the financial markets and is limited in how much debt it can raise.

– How does LV= say members would benefit?

Eligible members could receive £100 payments while eligible “with-profits” members with long-term investment products would receive enhanced payouts.

LV= argues that if it used internal capital to fund its growth ambitions, the majority of members holding eligible with-profits policies would be unlikely to benefit due to their policies maturing before LV= sees the returns on that investment. Under the proposals, it is Bain Capital that would fund the investment with a £530 million deal.

– Why was Bain Capital chosen?

According to LV=, the board undertook a thorough review, including comparing potentially remaining “as is” and closing to new business.

It says the Bain Capital transaction was identified as benefiting all LV= members.

Eligible voting members will be able to have their say about the proposals.

– How have LV=’s members reacted?

Some feel the potential loss of LV=’s mutual status would be a “betrayal”. There have also been calls for more information surrounding the deal to be made available to members.

A petition on Change.org to “stop the demutualisation of LV=” had attracted hundreds of signatures by Thursday.

Comments written underneath the petition included: “LV= hold my pension annuity. I bought from them because I wanted an ethical company where the profits did not go to shareholders. Demutualisation is a betrayal for members who made this choice.”

– Who else has voiced concerns?

Writing in Thursday’s Daily Mail Lord Heseltine described LV= as “a British institution which for most of its long life was known as the Liverpool Victoria mutual society”.

He wrote: “I believe fiercely that the sale should not go through.”

Shadow business secretary Ed Miliband has also expressed concerns.

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