Thursday, December 2, 2021

LV = defends decision to support acquisition by US private equity firm Bain

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The heads of the insurance associations LV = have defended their support for a takeover by the US private equity firm Bain Capital, arguing that the deal would be the best outcome for the members.

Board members said Monday that it would not be fair to ask LV = members to make “substantial” investments that are necessary to secure the future of the 178-year-old group.

The insurance and pension provider, formerly known as Liverpool Victoria, has embraced an approach from Bain. However, its 271,000 members must vote in favor of the agreement on December 10th before it can enter into force.

David Barral, LV = senior independent director, said the board of directors conducted a “thorough and detailed” strategic review last year that concluded that Bain’s offering was the best for members and employees.

The transaction will transform LV = from a mutual owned by its members, who share in all profits, to a limited company owned by Bain.

LV = said that after the Bain deal, members will pay 616 million

Politicians and activists said the additional payment was inadequate to compensate for the loss of members’ rights.

LV = executives countered that the mutual would eventually fail if the acquisition did not advance and it could not afford to invest in modernization, including new computer systems.

“We could only use our own capital for this investment, which otherwise could have been used to repay the members,” said the group.

“Without a guarantee of success, this would mean a higher risk for payments to LV = With-Profit members in the coming years.”

LV = has struggled to compete with global insurance giants, especially since it sold its non-life insurance business to Allianz for £ 1.1 billion between 2017 and 2019.

Alan Cook, Chairman of LV =, said, “There were numerous theories and opinions about the process and the decision. So that members can vote with the facts in mind, we show our analysis and the conclusions we have drawn.

“We urge members to vote at the December 10th meeting and vote in favor of the transaction with Bain Capital to protect their interests as well as the future of LV =.”

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