LV= is giving up its mutual status and is selling its savings & retirement and protection businesses to Bain Capital, the private equity firm, for £530m.
The deal follows the sale, for a total of £1.1bn, of LV=’s general insurance business to Allianz of Germany last year.
If members approve the deal, it will bring to an end 177 years during which the business has been owned by its membership.
The 1.3 million members who currently own the business are in line for a windfall payment, although the specifics are still to be decided.
There had been reports that Royal London was interested in LV=, but in October Bain Capital entered into exclusive talks to buy the mutual’s business.
Matt Popoli, global head of insurance, Bain Capital Credit, said his organisation is investing in “a unique company with an impressive management team and employee base, that is already well positioned in the market, with a clearly established product set, strong IFA relationships and a reputation for customer excellence”.
He said: “We have been impressed by LV=’s initiatives to further improve its market position, the benefits of which are already emerging. Our principles and values are in direct alignment with those of LV= and we firmly believe in a shared vision for the future of the business. We look forward to working collaboratively to achieve these shared goals, which include delivering profitable growth, while preserving LV=’s strong financial position, independence and rich heritage dating back to 1843.”
LV= chairman Alan Cook said that in “an increasingly competitive market”, the insurer’s board recognised that it required “significant long-term investment to be sustainable”.
Cook said: “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.”
LV= CEO Mark Hartigan said the deal recognises the opportunity to further invest to develop LV= at a time when it is “well positioned, growing market share, expanding its products and trading resiliently, despite the pandemic”.
Hartigan said: “While our corporate structure will change, our culture and values remain the same. The board is excited by the opportunities it creates for our people, partners and customers – enabling the LV= brand and business to further develop as a major force in the UK life insurance market.”
The acquisition is subject to regulatory approval and approval from LV= members. It is expected to complete by the end of 2021.