LV= defends decision to back takeover by US private equity firm Bain Capital

178-year-old insurance provider will cease to be a mutual under deal which bosses say gives ‘best outcome’ for members

Ben Chapman
Monday 22 November 2021 17:01
<p>LV= bosses have defended their decision to sell to Bain Capital (Tony Marshall/PA)</p>

LV= bosses have defended their decision to sell to Bain Capital (Tony Marshall/PA)

Bosses of insurance mutual LV= have defended their backing of a takeover by US private equity firm Bain Capital, arguing that the deal would be the best outcome for members.

Board members said on Monday that it would not be fair to ask LV=’s members to make the “significant” investment needed to be made to secure the 178-year-old group’s future.

The insurance and pensions provider, formerly known as Liverpool Victoria, has accepted an approach from Bain. However its 271,000 members must vote in favour of the deal in 10 December before it can go ahead.

David Barral, senior Independent director of LV=, said the board carried out a “careful and detailed” strategic review last year which concluded that Bain’s offer was the best for members and employees.

The transaction will transform LV= from a mutual owned by its members who share in any profits, into a limited company owned by Bain.

LV= said members would be paid £616m after the Bain deal, compared to £404m if it does not go ahead and business carries on as normal.

Politicians and campaigners have said the additional payment is not adequate compensation for members’ loss of rights.

LV=’s executives have countered that the mutual would eventually fail if the takeover does not go ahead and it cannot afford to invest in modernisation including new computer systems.

“We could only use our own capital, which could otherwise have been used to return to members, to make this investment,” the group said.

“Without any guarantee of success, this would create more risk for the pay-outs to LV= With-profit members over the coming years.”

LV= has struggled to compete with global insurance giants, especially since it sold its general insurance business to Allianz for £1.1bn between 2017 and 2019.

Alan Cook, chairman of LV=, said: “There have been numerous theories and opinions about the process and decision. So that members can vote with the facts in front of them, we are showing the analysis we did and the conclusions we reached.

“We urge members to vote at the meetings on 10 December and vote in favour of the transaction with Bain Capital to protect both their interests and the future of LV=.”

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