UK mutual insurer LV=, under fire for plans to sell the company to private equity firm Bain Capital, hit back at criticisms on Monday by saying the deal would result in an extra £212m payout for members.
Most LV= members will get a paltry £100 each from Bain’s £530m offer, sparking outrage from many. The deal goes to a vote on December 10.
LV=, formerly known as Liverpool Victoria, said its “business-as-usual” no-deal scenario would result in only £404m being distributed to its 271,000 members whose policies mean they share in its profits, compared with £616m under the Bain deal.
The 178-year-old firm has also been attacked by politicians and campaigners for failing to properly explain why members should sell out their rights.
It said it had considered 12 offers, one of which was from the pensions provider Royal London, but that Bain’s was the best.
LV= plans to pay out £533m over time to the 271,000 with-profits members, at an average of about £1,970, compared with an average of £1,490 without the takeover. 830,000 non-profit members will receive £100 each.
“Our board carried out a careful and detailed strategic review of LV= in 2020. We examined all the options, drawing on our own wide business and transaction experience and that of our professional advisors,” said David Barral, the insurer’s senior independent director.
“We all came to the firm conclusion it would not be fair for us to ask our With-profit members to finance a future that requires significant investment, which many would not benefit from.”
Barral added that accepting the Bain offer was “a decision we didn’t take lightly given our mutual heritage” but it was the best outcome because it “saves the future of LV=”.