What does £530m LV takeover mean for YOU?

Customers, members, and staff are all concerned about the planned sale of LV Capital to Bain Capital. 

If it goes ahead, the £530m deal will see one of Britain’s oldest financial institutions, formerly Liverpool Victoria, fall into US private equity hands. 

It will also end LV’s beloved status of a mutual, which was established 178 years ago to offer Liverpool’s poorer residents a chance to have a funeral. The plans – backed by the LV board – require approval from financial regulators and members in a crucial vote. 

Here are the answers to your questions about the deal. 

Missing the beat: An advert for LV car insurance

Missing the beat? An advertisement for LV Car Insurance

What does demutualisation mean? 

If the takeover goes ahead, ownership of LV will pass from its members to Bain Capital – demutualising the group in the process.

It would end LV’s 178-year-old tradition of putting members first, without chasing profits for shareholders and owners. 

Who gets to vote 

Anyone who has been a member at least one year. This number is 1.16m. Member ship comes through owning an eligible policy such as life insurance, income protection or a pension.

What about general customers of insurance? 

They are not members. The general insurance arm – which includes LV-branded products like car, home and pet cover – has been sold to German multinational financial services company Allianz. The deal will not affect these policies or policyholders.

When is the vote? 

Although the date has not yet been set, LV expects it will be this year. Although it was originally supposed to occur before July, the process of creating the ‘information packet’ has taken more time than expected. 

How many members must vote in favor? 

To pass the vote, 75% of members must vote for it with a turnout of 50%. But the mutual’s chairman Alan Cook has accepted it is ‘frankly impossible’ to get half of members to vote – so there will be a second vote allowing LV to change its rules. 

If 75 percent of the members vote in support of the rule change LV will petition a court for the removal of the turnout rules. 

The plot was branded’reprehensible’ by LV bosses who were accused of moving the goalposts to force a deal against the majority members’ interest. 

What will members receive if it is approved by the board? 

There are two different payments – but the amounts have yet to be decided. 

The first is an exclusive one that is only available to eligible members. 

This does not apply to policies taken out after March 1. 

The second payment is available to eligible LV “with-profits” policyholders, who will receive an enhanced payout when the policy matures. 

LV states that members will receive details about the payouts’ value before they vote. 

What is a policy with-profits? 

With-profits members have a long term investment product where premiums are pooled into a fund and invested. They are awarded bonuses that reflect the investment’s performance. 

Non-profit members can have an insurance policy that covers the sum insured as well as benefits such income protection and critical illness coverage. These policies do not attract bonuses. 

In charge: LV chairman Alan Cook

In charge: LV chairman Alan Cook

What happens to the policies of members?

LV says that the deal won’t affect the product and that the terms and condition will remain the same. Mutuo, an advocacy group for mutuals and cooperatives, warns that there may be price hikes or fewer options when policies are up for renewal. 

Is it a good deal? 

LV claims that it is an excellent’ deal. Others are less certain. Private equity ownership could lead to a shift in the focus away from members towards maximising profits. An investigation by the All Party Parliamentary Group for Mutuals found demutualisation would be bad for members. The MPs stated in their report that demutualization would be detrimental to members based on past experiences. They also noted that short-term payments for membership rights being lost are quickly recouped by higher costs and lower benefits.

Is it a good offer for staff?

LV insists that one of the benefits of this deal was continued support for its 1,500 staff members and UK offices. 

Mutuo said that the deal was equally harmful for employees as it is for members. It stated that promises made by Bain to keep offices open were’short-term’ and private equity firms are focused on maximising profits. 

Is there a better alternative? 

LV argues that is requires ‘significant investment to ensure future success’ – something it would struggle to do in its current state.

However, it was reported that a mutual London was the preferred choice for a panel representing LV’s 340,000 with-profits insurance policyholders when it offered the firm’s takeover. 

It reportedly offered £10m more than Bain at £540m. Mutuo also questioned why a deal was necessary after LV sold the remainder of its general insurance arm to Allianz, raising up to £365m.