Cash payouts due as LV= sells to US firm Bain Capital
The insurer is Bain’s second UK acquisition in the sector
About 1.3million members LV= will receive a cash payout after the company agreed to sell its savings & retirement and protection businesses to an American private equity firm.
The £530 million deal with Bain capital will see the insurer, previously known as Liverpool Victoria, drop its status as a mutual.
It follows the £1.1 billion sale of LV=’s general insurance business to Allianz of Germany last year.
Mark Hartigan, chief executive of LV=, said all of its members would receive a payment to compensate for the loss of ownership, though the precise payout is not yet known.
Under the proposal LV=’s with-profits business will be ring-fenced in a separate fund and closed to new business.
The capital available for distribution is expected to increase by up to 40% as a result of the transaction and will be used to increase payments to 340,000 with-profits members as their policies mature. Their long-term interests will continue to be protected by an experienced with-profits committee.
The acquisition is expected to complete by the end of 2021.
Alan Cook, chairman of LV=, commented : “As a newly standalone life and pensions business in an increasingly competitive market, the board recognised that LV= required significant long-term investment to be sustainable.
“This transaction is the culmination of an extremely thorough and robust strategic review followed by a structured sale process to secure the best long-term future for our members, employees, other stakeholders and the business.
“The board is delighted to have secured an attractive price and unanimously agreed that the transaction with Bain Capital presents an excellent financial outcome for all our members, as well as offering an unrivalled commitment to LV=’s future prospects, business and people. We look forward to engaging fully with our members in advance of a member vote in the first half of 2021.”
The life insurer said it had completed an in-depth ‘strategic review’ before deciding to sell itself to Bain Capital, after receiving 12 formal bids from other businesses, including Royal London.
The deal marks a further foray into the UK’s insurance market for Bain capital which acquired Esure two years ago.