The rival company claimed that LV might still be owned in a deal it made with Royal London.
Bain Capital, a private equity firm that seeks to buy the historic insurer, has attempted to do so in an unpopular transaction.
Bain could take over the 178-year old business owned as a mutual by policyholders.
Loggerheads: LV chairman Alan Cook (left) and Royal London boss Barry O’Dwyer (right)
LV’s owners were not required to surrender their ownership, despite an unusual war of words between LV and Royal London.
Bosses at Royal London said they were willing to table a new offer which would allow LV to remain a mutual, and urged the company’s board and Bain to open discussions.
But Mark Hartigan, LV’s chief executive, accused Royal London of lobbing a ‘hand grenade’ into its deal, and said he was ‘disappointed’ with its tactics.
Royal London held discussions about purchasing LV in the last eight years. It is believed that a deal was close to being signed in 2017.
But when Alan Cook took over as LV chairman that year, he decided to ditch the deal and launch a ‘strategic review’.
LV put itself up for auction last year. It claimed it needed additional money to invest into modern technology.
The mutual courted other suitors, and the process culminated last year with the selection of US private equity firm Bain as its preferred bidder – sparking a furious backlash. Royal London attempted to revive their offer, now that LV policyholders are about to vote.
Keen: Royal London has held talks about buying LV over the past eight years, and it is understood that a deal was almost signed in 2017
Royal London chief executive Barry O’Dwyer said: ‘The near-universal dismay which has greeted [Bain’s] proposal means that I think there is a significant risk now that members won’t support that proposal. I wrote a private email address to the chief executive of LV [Hartigan] offering to help construct an alternative.’
He claimed this ‘alternative’ could involve LV staying a mutual.
Hartigan hit back, as he finally revealed more details of Bain’s and Royal London’s rival deals.
He admitted that Royal London had actually offered £540million to buy LV, £10million more than Bain.
But he claimed that Royal London planned to leave ‘material liabilities’ with the fund, which is responsible for making pay-outs to LV’s so-called ‘with-profits’ members.
These liabilities, understood to include loss-making policies called Lifetime Plus, could have eaten up members’ cash if the business began to struggle.
Hartigan claimed that Royal London also failed to complete its due diligence – the under-the-bonnet checks which a firm does on a rival it’s hoping to buy.
And he said Royal London had been ‘grossly misleading’ to suggest that LV could remain a mutual under its offer. Hartigan said Royal London’s 11th hour intervention was a ‘hand grenade to disrupt the process’.
Royal London did not change its mind. ‘Staying mutual is an option if LV makes this a priority and engages in talks with us,’ it said.
It is understood that Royal London’s original proposal would have seen LV demutualised.
But the firm claims it could structure an offer which would see LV’s business merged with its own, and owned by the combined pool of members. O’Dwyer said: ‘LV members have an important choice to make.’
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.
It is possible to use the words from the Daily Mail newspaper’s City Pages (photo here).
You can find the text below and copy it into a new letter.
You can send it to Alan Cook (Chairman of LV=), Liverpool Victoria County Gates Bournemouth BH1 2NF
Dear Alan Cook,
The undersigned urges you to reconsider the decision to sell LV=to Bain Capital, and instead to maintain its mutual status.