LV= seeks to reassure members after Royal London merger talks collapse
Mutual insurer LV= has told members it was wrong to say that it could not survive without being taken over by Bain Capital, after plans for its merger with Royal London collapsed last week.
In a letter to LV=’s 1.1m members, the firm said LV=’s Board no longer believes that merging with another mutual insurer would be “beneficial” for its members – after company CEO Mark Hartigan claimed just two months ago that LV= could not keep going on its own.
The letter comes after the LV= CEO in December told members that LV= needed to demutualise to ensure its survival, in seeking to persuade members to vote in favour of plans for a takeover by Bain Capital, a US private equity firm.
In seeking to explain the turnaround from its previous position, LV= said its plans to sell itself to Bain Capital for £530m “took place against the backdrop of a global pandemic and significant market uncertainty,” as it claimed the firm is in “a very different place to where it was 18 months ago.”
The letter to LV=’s members says that both LV=s CEO, Mark Hartigan, and the mutual insurer’s board of directors “fully expected that the LV= brand, business and people would be lost.”
Hartigan was set receive a multi-million-pound payout if the takeover had gone through, according to reports.
The letter, from LV= director Seamus Creedon – who is set to take over from LV=’s current chairman, Alan Cook, at the end of March – seeks to “reassure” LV=s members that the firm is “well-capitalised and trading strongly,” despite Hartigan’s previous comments.
“In light of the improving business performance over the last 18 months, the Board has been able to be more considered in its assessment of future options, including that the proposed merger offer with another mutual would not be beneficial for our members,” the letter says.
The letter also says the firm will be hosting a series of webinars, through which the insurer will explain why it is now “confident that staying as an independent mutual provides a sustainable future for LV=.”
The letter comes after LV= scrapped plans to merger with Royal London, the UK’s largest mutual, last week.