New backlash over £530m private equity swoop on insurer LV

New backlash over £530m private equity swoop on insurer LV: MPs warn customers will lose out

  • The mutual, formerly known as Liverpool Victoria, last year agreed to a £530m takeover by Bain Capital 
  • US-based Bain plans to remove the 178-year-old life insurer’s mutual status – meaning it will no longer be owned by its members 
  • Critics of the deal argue this is central to how LV operates


The sale of historic insurer LV to private equity has been blasted by MPs amid warnings customers will lose out. 

The mutual, formerly known as Liverpool Victoria, last year agreed to a £530m takeover by Bain Capital, snubbing an approach from the UK’s largest mutual life, pensions and investment firm Royal London. 

But with concerns mounting over what the deal will mean, it will be debated by MPs in Parliament next week. 

Signing off: US-based Bain plans to remove the 178-year-old life insurer's mutual status ¿ meaning it will no longer be owned by its members

Signing off: US-based Bain plans to remove the 178-year-old life insurer’s mutual status – meaning it will no longer be owned by its members

US-based Bain plans to remove the 178-year-old life insurer’s mutual status – meaning it will no longer be owned by its members. 

Critics of the deal argue this is central to how LV operates. When it was set up in 1843, its founders believed that without trying to make a bumper profit for shareholders, they could focus on providing good insurance for poor and underprivileged policyholders. 

Labour’s Gareth Thomas, chairman of the all-party Parliamentary group (APPG) on mutuals, has tabled a debate on the deal scheduled for Wednesday. 

He hopes the event in the House of Commons will prompt Government scrutiny of the takeover, which would represent yet another British firm being sold to an overseas predator. 

The Harrow West MP said: ‘If the demutualisation of Liverpool Victoria goes ahead, it will see a controversial US private equity giant taking ownership of a British customer-owned business with considerable financial assets. 

‘It is easy to see how the chairman and chief executive of Liverpool Victoria might benefit, but as demutualisation usually lead to worse customer service and lower pay-outs, it’s far from clear how anyone else will benefit.’ 

Another of the UK’s historic insurers, RSA, was sold to overseas competitors last year. 

And private equity firms have been plundering Britain’s business landscape since the start of the pandemic. Firms including G4S, the AA and Asda have all been snapped up – while Morrisons and defence firm Ultra Electronics look set to follow. 

LV has hosted two online meetings for its members this week, in which its own top brass and Bain’s head of insurance Matt Popoli tried to convince customers that the deal would be in their best interests. Across the two Zoom meetings, 213 of LV’s 1.3m members dialled in to quiz chairman Alan Cook and chief executive Mark Hartigan. 

On the call, Cook said: ‘The deal with Bain Capital will deliver a strong financial outcome for all members, an excellent purchase price, long-term investment for growth, a commitment to supporting the LV brand and values and the ongoing presence of LV in our three UK locations.’ 

LV has offices in Bournemouth, Exeter and Hitchin in North Hertfordshire. But members still have no idea how much they will make from the deal, if they sell their stake to Bain, as LV and the private equity firm have not yet finalised the details of the proposed sale with the Financial Conduct Authority. 

Members will then be asked to vote on the deal. 

The APPG on mutuals has pressed Hartigan and Cook to reveal how they might benefit from the sale of LV. 

On the call with members this week, Cook said: ‘As chair I have not received, nor will I ever receive, bonus payments of any kind and the same is true of all the non-executive directors.’ 

When quizzed about Hartigan’s pay, he added: ‘For executive directors such as the chief executive we have a very explicit remuneration policy for their ‘business as usual’ roles and responsibilities.’

source: dailymail.co.uk