Royal London’s proposed merger with LV= has moved a step closer as the two providers confirmed exploratory talks have taken place amid a shake up of LV=’s board who are taking responsibility for the collapsed Bain Capital deal.
Alongside confirmation of the talks, LV= revealed a number of high profile departures from its board and that from 1 April Seamus Creedon will take over as interim successor to outgoing chairman Alan Cook, subject to regulatory approval.
Following shareholders’ rejection of the proposed £530m sale to Bain Capital, Cook revealed he would be stepping down as chairman after finding a way forward for the insurer.
In December just 69% of LV= members voted in favour of the proposed deal – below the 75% required for the sale to proceed and end the firm’s mutual status.
That announcement coincided with Royal London confirming it was to enter into exclusive talks about merging with LV=.
In a statement released this morning, Creedon said LV= understood the feeling among its more than one million membership that the financial advantages of the Bain Capital deal were not worth giving up their ownership of the mutual or their voting rights.
LV= was offering members £100 cash and increases to with-profits policy payouts if they approved the deal.
The insurer’s statement also revealed board member David Barral will reach the end of his six year term on 7 March and will therefore step down from the board, while at the end of March, Alison Hutchinson and Luke Savage will also step down as non-executive directors and members of the board.
Elaborating on the task ahead, Creedon added that he is charged with finding a new chairperson and directors who will continue to develop LV= as a modern mutual insurer.
“I will be working closely with Mark Hartigan who has been doing an excellent job in strengthening the performance of the business,” he said.
“The board takes full responsibility for the unsuccessful transaction which Mark actively advocated on its behalf and my colleagues and I have high confidence in him and his team.
“Since the vote we’ve been listening to feedback from our members that many value our brand and proud history as a mutual, and are keen to see these continue.
“We have a strong balance sheet and have refocused our planned IT investment to continue to carefully manage our capital in order to sustain value for members. The uncertain course of the pandemic has renewed customers’ interest in insurance and income protection and we believe as a mutual in standing ready to meet those needs.”
Touching on Royal London’s interest in merging with LV=, Creedon said the firms shared a common interest in a healthy and vibrant mutual sector so they can compete fairly with shareholder-owned firms.
“We have had, and continue to have, discussions with Royal London about if and how we can co-operate to the benefit of both sets of members and the mutual sector,” he added.
“In the meantime, we will continue to strengthen our independent business for the benefit of our existing and future policyholders.”
This morning Royal London issued its own statement revealing it had conducted “exploratory discussions” with LV= and while there was no certainty these discussions would result in a transaction, a further announcement would be made as and when appropriate.