Bosses at LV have launched a last-ditch attempt to push through the mutual’s controversial sale to US private equity.
In a statement branded ‘desperate’ by critics, the life insurer finally revealed details of the strategic review which ushered LV into Bain Capital’s jaws.
LV’s board said the review was ‘careful and detailed’ and selling the firm to Bain was the best way forward.
LV finally reveals details about the strategic review that led to the life insurance company being taken by Bain Capital
But experts slammed the mutual’s bosses for failing to be fully transparent on a host of issues, including:
- How many jobs are likely to be axed from LV under Bain’s ownership;
- How many fees LV incurred on bankers, lawyers and other advisers throughout the review process and plan sale.
- Bain may offer Mark Hartigan, chief executive of Bain, incentives to keep him on.
- How members’ interests would have fared under a rival bid from fellow mutual Royal London;
Labour MP Gareth Thomas, who chairs the All-Party Parliamentary Group on Mutuals, said LV’s statement was ‘a fairly desperate effort to spin figures that members are already aware of’.
LV, formerly known as Liverpool Victoria, is a mutual – meaning it is owned by its 1.2m customers.
It was founded in 1843, offering ‘penny policies’ to give poorer families in Liverpool the chance to bury their dead with dignity.
Its mutual status means it is run entirely for members’ benefit, rather than to make money for shareholders, and that has been a key attraction for customers over the years.
Bain may sell LV to them, but if they do, their board hopes that the company will lose its mutual status. The business would then be taken over by a greedy investor.
Members are being asked to vote on the deal – they have until December 8 to cast their ballot by post or online, or can do so during an online meeting on December 10.
After a thorough strategic review by bosses, the sale was conceived last year. In an update to members yesterday, LV said the review concluded that the firm was a ‘sub-scale life and pensions business with an insufficiently strong capital structure’.
Rival Royal London pressures LV chief executive Mark Hartigan to reopen negotiations (pictured).
The review concluded that carrying on LV’s business as usual ‘was not fair for members’, because the firm would have had to use some of the money earmarked for their future payments to invest in its technology.
More than half of the 271,000 LV customers who hold so-called with-profits policies – meaning they share in the company’s fortunes – are due to see their policies mature over the next decade, at which point LV will have to pay up.
According to the firm, they were concerned that it might use their money for investment and have to lower their payouts because it wouldn’t have received any cash back at the time.
However, experts question why LV chose not to accept a similar offer from Royal London.
Royal London urged Hartigan to reopen negotiations. Hartigan even suggested that a deal be made which would enable the firm to stay a mutual. LV refuses to communicate.
Peter Hunt, of mutuals consultancy Mutuo, said: ‘Hartigan says the Bain deal is the only way that keeps LV in business, but it’s also the only one that keeps him in a job. If LV, as he claims, is a British-based company that’s great, why should it be sold to Americans?
‘Getting information out of LV has been impossible. It’s like a Kafka novel.’
Bain Deal has been criticized by members as well experts. They fear that US private equity sharks will use LV to make money, cutting job opportunities and raising prices. Members have been offered an ‘insulting’ £100 each to give up the company.
As he attempted to explain the strategic review yesterday, LV chairman Alan Cook said: ‘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 on December 10 and vote in favour to protect their interests and the future of LV.’
Get your opinion heard at LV
We are encouraging LV members, customers, or others, who would like to see it retain its mutual status, rather than be bought out by private equity, to write to it.
The wording of the Daily Mail’s City pages letter could be used (pictured below).
Below are the words that you can copy and paste in a letter.
It can be sent to Alan Cook Chairman of LV= Liverpool Victoria, County Gates Bournemouth, BH12NF
Dear Alan Cook,
I urge you, the undersigned to reconsider your decision of selling LV= to Bain Capital. Instead, keep it in its mutual status.