International

Life insurer LV faces growing backlash over sale to private equity group Bain


The planned sale of LV, one of the UK’s oldest mutually owned life insurers, is under mounting pressure from members and politicians firmly opposed to the group being taken over by a private equity group.

LV announced last week that members would receive £100 each to approve the takeover by US group Bain, with more for those holding eligible with-profits policies.

The deal’s supporters have until December 10 to convince three-quarters of those voting to accept the sale and a related change in scheme rules.

But some members are vehemently opposed to the sale. “We can have a shopping delivery from Sainsbury’s, and that can be for £100, just for our food for the week,” 74-year-old Clarissa Johnson, an LV member who does not have with-profits benefits told the Financial Times. Another, 72-year-old Duncan McGibbon from Bath, said the offer was a “bit of an insult”.

They are part of a vocal group of pro-mutual members who plan to vote against the £530m sale to the US private equity firm, which was chosen last year over other bids including that from fellow mutual Royal London. They lament that their policies will no longer be administered by a mutual, operating for the benefit of its members.

As the deadline nears, Royal London has recently approached LV again, proposing alternative three-way talks with Bain about splitting up the mutual, according to a person familiar with the matter.

In a statement on the approach, which was first reported by the Mail on Sunday, Royal London said it was “ready to explore any option that delivers a better member outcome.” LV did not respond to a request for comment.

Members’ concerns over the Bain takeover are increasingly being shared by senior UK politicians. “LV should not be demutualised,” MP Angela Eagle, a former shadow business secretary, told the FT.

Limits on what mutuals can do are being used as an excuse for groups to demutualise, she added. The process “rewards senior managers very handsomely” and allows investors “to plunder assets accumulated carefully over many years”.

A member of the Treasury select committee, Eagle is pushing for the body to hold a hearing on this issue, and wants demutualisation to be made much harder.

Tory peer Michael Heseltine this week said in the Daily Mail that Bain’s offer represented “30 pieces of silver”, while Labour’s shadow business secretary Ed Miliband also raised concerns. More than 700 people have signed a petition calling on regulators to block the sale.

LV’s chief executive Mark Hartigan has defended the Bain offer, telling the BBC this week that it would safeguard jobs and the LV brand, and boost investment in the company.

But critics have questioned why Royal London’s bid last year was not management’s chosen option. Two people briefed on the matter confirmed the rival bidder had offered £540m.

The Royal London bid did not, however, offer a “clean exit” for LV’s with-profits members, the people said, and left them with some liabilities relating to long-term insurance policies. The Bain offer took away those risks, said the people.

MP Gareth Thomas, a staunch opponent of the deal as the chair of the All-Party Parliamentary Group for Mutuals, called for an “honest debate about the virtue of both bids”.

He criticised the “lack of transparency” from LV during the process, including not publishing the full details of the Royal London bid.

Royal London declined to comment on the terms of the original deal. LV earlier this week said it could not comment on a confidential process. Bain declined to comment.

The Financial Conduct Authority has given the green light for the deal to go to a vote, but said it would “continue to consider the responses of LV’s policyholders and members” ahead of final regulatory signoffs on the sale.



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