The chair of the All-Party Parliamentary Group for Mutuals, Gareth Thomas, has written to the CEO of LV=, Mark Hartigan, for answers about the demutualisation of its life and pensions business.
Mr Thomas, Labour/Co-op MP for Harrow West, invited Mr Hartigan to give evidence to an inquiry by the group into the matter.
He says the £530m takeover of the 178-year-old LV= by US private investor Bain Capital “has been seen as particularly controversial as other deals, such as a £540m bid from fellow mutual the Royal London Group, which would have permitted the company to retain its mutual status, have been rebuffed”.
Mr Thomas said: “We look forward to hearing Mr Hartigan’s evidence for the demutualisation of Liverpool Victoria. We are keen to understand why he thinks such a move is in the interests of LV’s current owners; their members and similarly why he thinks it might be good for consumers and for competition.”
LV=, one of Britain’s biggest financial mutuals, was founded in 1843 and traded for most of its life as Liverpool Victoria. The sale in December 2020 of the life and pensions business to Bain Capital follows the sale of LV= General Insurance to Allianz in 2019.
Mr Thomas said: “Members of the parliamentary group are concerned at what impact the sale will have on LV= members, the insurance industry and competition and choice in financial services. We are also interested in whether the LV= decision reflects weaknesses in the government and regulators’ views and support of mutuals.”
A spokesperson for LV= said: “As part of this process, we have already proactively offered the Chair of the APPG for Mutuals a detailed discussion on the transaction with Bain Capital. We welcome the opportunity to more formally explain why Bain Capital was singular in offering not only an excellent financial outcome for members but also an unrivalled and long-term commitment to LV=’s future prospects, business and people.”
When it announced the sale in December 2020, LV+ said the move would deliver “an excellent financial outcome for members with greater security and enhanced distributions for with-profits members” and emerged from a “board-led, comprehensive and rigorous strategic review”.
It said the sale “maintains competition and choice for customers and IFAs in the UK market by supporting LV=’s ambitions to grow its leading brand, distribution and products, adding: “Bain Capital Credit offers an unrivalled commitment and experience to LV=’s future prospects, business and people.”
The APPG says it will seek evidence from mutual sector experts, financial analysts and from LV= itself. It is keen to hear from other individuals and organisations and with an interest in this Inquiry. The deadline for the submission of written evidence is Friday 5 March and the APPG plans to hold a number of oral evidence sessions in the first quarter of 2021, before publishing its inquiry report.
The APPG says it will consider, and is keen to understand:
- The context of why at this time the status quo is not good enough, given LV=’s brand strength, capital and momentum
- The impact that the sale will have on LV=’s members, the insurance industry & the implications for competition & choice in financial services more widely
- The rationale that supported the decision by the Board of LV= to sell the business to Bain Capital, and whether other options were considered fully
- The motivation behind LV=’s recent conversion from a friendly society to a mutual company, including how this is connected to the proposed demutualisation
- The wider legislative framework for Friendly Societies and Mutual Insurers, with a particular focus on barriers to raising capital, protection from demutualisation and attitude of Government and regulators.
Evidence can be submitted to the APPG Secretariat at [email protected]