LV= is offering members £100 cash and increases to with-profits policy payouts if they approve the proposed £530m acquisition by Bain Capital.
The insurer published its voting pack detailing the expected financial benefits to members if they rubber stamp the deal with the US private equity firm. For the deal to proceed, 75% of members voting must support it.
As part of the pre-voting arrangements, LV= is also providing financial advisers with briefings and a separate webinar to support them in answering queries from their clients who are LV= members.
The proposed takeover has been controversial with the All Party Parliamentary Group for Mutuals (APPGM) being particularly vocal in questioning the decision process and motives.
Late last month, the Financial Conduct Authority (FCA) revealed it was requiring LV= to improve communications with members about the deal as it granted permission for the mutual to proceed with a court hearing related to the proposed sale.
The insurer revealed today it is running series of five webinars for members in the build-up to a Special General Meeting (SGM) and members’ meeting.
It is also operating extended opening hours of 8am – 7pm Monday to Friday and 9am – 1pm on Saturday to offer members the opportunity to discuss the transaction and ask questions at a time to suit them.
LV= has set up dedicated email boxes for non-profit members and for with-profits members
At the SGM on 10 December 2021, members will be asked to vote on a Special Resolution to approve the acquisition of the LV= business by Bain Capital.
At the members’ meeting on 10 December 2021 at 4pm, members will be asked to vote on the most effective way to complete the transaction through a Scheme of Arrangement to make a change to Article 14.23.
Details of the benefits of the deal will be included in the member vote pack and distributed on 10 December 2021.
Benefits identified in member vote pack
The document explains that should the transaction go ahead the £530m paid by Bain Capital replaces the value of the non-profit business and would enable the surplus assets, after allowing for other commitments, to be distributed to members.
Consequently, the document says members will receive the following financial benefits:
- £212m will be distributed in the form of payments to members, totalling:
- £111m in one-off member payments, with every eligible member receiving a payment of £100.
- £101m increase in future with-profit policy payout enhancements for all eligible with-profits members.
- This represents a percentage uplift of 0.1% for each year members have held their policy from 1996 until the policy pays out.
- In addition, as part of the transaction significant assets will be set aside to support the two existing staff defined benefit pension schemes, which are the responsibility of the with-profit fund to support.
Other benefits identified include:
- Continuation of existing customer policy benefits, including discounts on LV= general insurance products.
- Investment by Bain Capital to deliver technology improvements, development of existing and launch of new products and service enhancements for customers.
- LV= to remain a UK regulated entity, providing ongoing protection from the Financial Services Compensation Scheme.
- Continuation of the LV= brand, with Bain Capital taking ownership of the operational infrastructure and as the employer of staff.
Significant investment needed to compete
Alan Cook, chairman of LV=, said: “In order to be successful in a highly competitive market, we need significant investment to compete and achieve our ambitions for growth.
“Bain Capital was the only option that offered both an excellent financial outcome for members and gave unrivalled support for the LV= brand, our people and locations.
“While none of the bids would have allowed LV= to remain as a standalone mutual, this deal provides the highest distribution to with-profits policyholders compared to continuing with business as usual or closing to new business.”
He urged members to carefully read the information in the member vote pack and join our upcoming webinars, adding that the board fully supported the plans.
Mark Hartigan, CEO of LV=, said the company going forward would be financially strong and structured with less debt.
“This transaction will enable LV= to continue to look after over one million customers, while creating investment in our business that will enhance the services we provide,” he said.
Matt Popoli, global head of insurance at Bain Capital, added: “We recognise the responsibility that comes with such a rich and important heritage, and this will be reflected in our support for an ongoing presence across LV=’s three UK sites, continued commitment to investing in the communities where the company operates and sharing and strengthening LV=’s customer-centric ethos.”