The battle to save LV from private equity predators intensified last night as the mutual’s members hit out at a planned takeover.
Hundreds have contacted the Mail with concerns about the £530million deal – which would earn the historic insurer’s members as little as £100 each.
Regulators have been urged to step in over fears that those voting on the deal were given ‘one-sided’ information about the proposed buyout.
At present, LV – formerly Liverpool Victoria – is owned by its 1.2million members. After turning down an opportunity from Royal London, board members are looking to sell the 178-year old insurer to Bain Capital.
Private equity firms have become notorious for pursuing quick profits by cutting jobs – then leaving behind long-term problems.
Critics of the deal are demanding to know how much chief executive Mark Hartigan and chairman Alan Cook – who are backing the offer from Bain – stand to benefit from the deal.
The battle to save LV from private equity predators intensified last night as the mutual’s members hit out at a planned takeover
Bosses swore blind they wouldn’t sell out
Nervous: Rena Higgins and John Higgins voted in favor of the takeover earlier than expected
John Higgins and his wife Rena feel ‘betrayed’ by LV over the sale to Bain Capital.
The couple have been with the mutual company for more than 30 years – and are fighting against the private equity firm’s takeover.
Mr Higgins, 85, from Ayr, said: ‘We have had a succession of chairmen who have all sworn blind they would maintain its mutual status. Now we feel betrayed. The intention appears to be to sell the business under our nose.’
Although they voted in favor of the takeover early on, the couple is still anxious about its outcome.
Mr Higgins said: ‘The package that came through looks very sophisticated. It is possible that people with less experience in this type of stuff than we may believe the takeover will be the best. My fear is that this is what will happen – enough people will vote Yes to back the takeover.’
A £100 sum – described as an ‘insult’ by the couple – has been promised to policyholders if the Bain Capital buyout goes through.
Mr Higgins explained: ‘It’s a dinner for two. I am trying to rally support against the takeover among the members’ panel – most are strongly against it anyway.’
Some policyholders now want a special general meeting before the members vote on next month’s buyout. Their proposals include opening talks with Royal London – and dismissing Mr Cook and Mr Hartigan.
Members have been offered just £100 each to give the company up. Around 340,000 who own ‘with-profits’ policies will get an additional small sum when their policies mature.
One policyholder, Duncan McGibbon, has launched a petition on the website change.org, calling on the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority to pressure LV into releasing more documents about the deal. He claims the information released to members was ‘inadequate and one-sided’.
As the backlash grew, former Conservative Party leader Sir Iain Duncan Smith said LV was being ‘dismembered’ and urged members to ‘think hard before they vote’.
Respecting each other is an important moral principle
Duncan McGibbon had hoped LV would eventually be bought by another mutual. Royal London, the UK’s largest mutual insurer, is reportedly waiting in the wings should Bain fail
Stopping the sale of LV to Bain Capital is a ‘purely moral’ issue for Duncan McGibbon.
A member of the mutual for over 30 years, he said: ‘It’s very important for me to be a member of a mutual. It gives people the opportunity to be empowered and gives them a sense that they are part of something larger than themselves. The issue is a purely moral one.’
The former teacher, 72, from Bath, added: ‘LV claimed Bain Capital was the best option… it’s utter hypocrisy. The leadership stand to maintain their positions after any takeover.’
McGibbon had hoped LV would sell to another mutual. Royal London, the UK’s largest mutual insurer, is reportedly waiting in the wings should Bain fail.
McGibbon now has a petition asking for regulators to stop the vote until LV provides more information about competing bids.
Kevin Hollinrake is a Tory MP and co-chairman the All Party Parliamentary Group Fair Business Banking. He called on the FCA not to approve the deal.
‘They should prevent this going ahead,’ he said. ‘We used to have a strong mutual sector but this is disappearing.’
He continued: ‘The suspicion is that this is in the interest of executives, not members. They’ll get a big payday out of this.’
Concerns also were raised over the involvement of LV’s experts to assist with the transaction. One, Oliver Gillespie of consultancy Milliman, was appointed by LV to ‘evaluate the implications’ of the sale to Bain.
Labour MP Gareth Thomas, chairman of the All Party Parliamentary Group for Mutuals, has written to Mr Gillespie asking whether he had been told why other offers ‘were not acceptable’.
Simon Grout, FTI Consulting’s Simon Thomas also wrote to Thomas. Grout will be summoned to court when LV tries push for its demutualisation.
While Mr Grout is supposedly independent, he is employed by the same firm acting as LV’s public relations adviser. Mr Thomas has asked him: ‘Can you therefore explain how there isn’t a conflict of interest?’
FTI spokesmen said that strong internal divisions were in place to protect against problems like this.
LV’s bosses claim the insurer desperately needs more cash to fund its future expansion, and that Bain’s offer was the ‘only option that offered both an excellent financial outcome for members and gave unrivalled support for the LV brand, our people and UK-based locations’.