LV makes desperate bid to close £530m private equity deal

LV makes desperate offer to secure £530m private equity acquisition deal as the mutual is criticized for lack of transparency







bosses at LV have made a last-ditch effort to push through the controversial sale of the mutual to US private equity.

In a statement labeled “desperate” by critics, the life insurer finally revealed details of the strategic overhaul that brought LV into the jaws of Bain Capital.

LV’s board said the assessment was “careful and detailed” and that selling the company to Bain was the best way forward.

'Desperate': LV finally revealed details of strategic overhaul that put life insurer in Bain Capital's jaws

‘Desperate’: LV finally revealed details of strategic overhaul that put life insurer in Bain Capital’s jaws

But experts criticized the bosses of the mutual for not being completely transparent on a host of issues, including:

  • How many jobs are likely to be cut at LV under Bain’s ownership;
  • What fees LV has earned from attorneys, bankers, and other advisors during the review and planned sale;
  • What incentives CEO Mark Hartigan (pictured) might receive if he is detained by Bain;
  • How the interests of the members would have fare under a rival bid from fellow members of Royal London;

Labor MP Gareth Thomas, chair of the All-Party Parliamentary Group on Mutuals, said LV’s statement was “a rather desperate attempt to spin numbers that Members are already aware of”.

Formerly known as Liverpool Victoria, LV is a two-way business, meaning it is owned by its 1.2 million customers.

Founded in 1843, it offered ‘penny policies’ to give poorer families in Liverpool the opportunity to bury their dead with dignity.

Thanks to its mutual status, it is run entirely for the benefit of the members, rather than to make money for the shareholders, and that has been a major attraction for customers over the years.

But if LV is sold to Bain, as the board hopes, the company will be stripped of its mutual status and taken over by a profit-hungry investor.

Members are being asked to vote on the deal – they have until December 8 to cast their vote by mail or online, or can do so at an online meeting on December 10.

The sale was conceived last year, after bosses hired consultants to conduct a strategic review. In an update to members yesterday, LV said the assessment concluded that the company was a “subscale life and retirement business with an insufficiently strong capital structure.”

Press: Rival Royal London has urged LV chief executive Mark Hartigan (pictured) to reopen negotiations

Press: Rival Royal London has urged LV chief executive Mark Hartigan (pictured) to reopen negotiations

Press: Rival Royal London has urged LV chief executive Mark Hartigan (pictured) to reopen negotiations

The investigation concluded that continuing as normal at LV was “not fair to members” because the company should have used some of the money set aside for future payments to invest in its technology.

More than half of the 271,000 LV customers with so-called for-profit policies — meaning they share in the company’s fortunes — will see their policies mature over the next decade, after which LV will have to pay.

The company claimed it feared that if it used their money to invest, it would have to reduce their payouts as it would not have made the money back in time.

But experts have challenged why LV didn’t aim for a rival offer from Royal London.

Royal London has urged LV boss Hartigan to reopen negotiations and has even offered to negotiate a deal that will allow the company to remain mutual. LV has refused to communicate.

Peter Hunt, of mutual consultancy Mutuo, said: “Hartigan says the Bain deal is the only way to keep LV in business, but it’s also the only way to keep him working. And if LV is a big British company, as he says, why would you sell it to the Americans?

“It was impossible to get information from LV. It’s like a Kafka novel.’

The Bain deal has drawn sharp criticism from members and pundits, who worry that the US private equity shark will milk LV for cash by cutting jobs and raising prices. Members have been awarded an ‘offensive’ £100 each for giving up the company.

Trying to explain the strategic review yesterday, LV Chairman Alan Cook said: “To ensure members can vote with the facts in front of them, let’s show the analysis we’ve done and the conclusions we’ve drawn.

“We urge members to vote and vote in favor on December 10 to protect their interests and the future of LV.”

Make your voice heard on LV

We encourage LV members, clients, or others who would like it to maintain its mutual status, rather than being bought out by private equity, to write it.

You can use the wording from the letter printed on the City pages of the Daily Mail (shown here).

We have included the words that you can copy and paste below into a letter.

Send it to Alan Cook, Chairman of LV=, Liverpool Victoria, County Gates, Bournemouth, BH1 2NF

Dear Alan Cook,

I, the undersigned, urge you to reconsider your decision to sell LV= to Bain Capital and instead maintain the mutual status.