“I… confirm that as soon as a way forward is agreed that I intend to step down as chair.”
Those were the words of Liverpool Victoria Financial Services Limited (LV=) chair Alan Cook when LV= painted a picture of what’s to come after the life insurer failed to secure the required level of support from members to push its planned takeover by private investment firm Bain Capital forward.
As previously disclosed, only 69% of those who voted gave the £530 million deal a nod – short of the needed 75% to allow the sale to proceed.
Following the voting result, it was announced that LV=’s board would be moving “swiftly” to reassess strategic options and explore alternatives for the benefit of both members and staff. In the interim, LV= will continue to trade as usual.
“The board remains committed to finding a solution to the challenges presented by a declining with-profits membership base,” declared Cook. “As we have said throughout this process, the growth and investment required to remain competitive over the long term is not a fair or appropriate burden for our with-profits members to bear.
“This investment would delay and potentially impact the level of returns they could expect to see, given a quarter of our members are with-profits policyholders today, and we expect over the next 10 years this will reduce to only 10%. Therefore, as we move into 2022, I will continue to lead the process to find a way forward that will enable us to provide the right financial outcome for all our members while respecting their different wishes.”
“However,” he added, “I also confirm that as soon as a way forward is agreed that I intend to step down as chair.”
According to LV=, its board will be providing an update next year as soon as it can.
The insurer stated: “The board has listened to member concerns about the loss of mutuality and so will, in particular, explore whether mutuality can be retained either on a standalone basis without undue risk to members, or through a merger with a larger mutual organisation…
“We are aware that Royal London has made statements concerning its interest in further discussions which it has said might incorporate membership for some or all of our members and we expect, among other things, to explore such a possibility.”
Royal London has indeed offered to enter into exclusive talks with LV= on a potential mutual merger.
“We envisage that the terms of the merger would offer LV= members the option to become members of Royal London,” asserted the latter, after recently reviving and revising its bid for rival LV=.
“If the merger goes ahead, the bringing together of the best of both companies will result in a growing, well-capitalised, modern mutual. It will provide a great customer-owned alternative to the rest of the insurance and long-term savings market, which is almost universally shareholder-owned.”
Meanwhile Cook took the opportunity to offer thanks and assurances ahead of his imminent departure.
He said: “The business is trading strongly and remains appropriately capitalised. As well as driving an improved trading performance, our CEO, Mark Hartigan, has delivered on the board’s requirements throughout this strategic process. The board continues to provide its absolute and full support to his ongoing work to address the long-term challenges facing LV=.
“We want to reassure policyholders that this [voting] outcome will mean no changes to their policies or our ongoing commitment to the highest standards of service from LV=. I would also like to say thank you to our people, who have worked so hard to support our customers during this process and to our adviser network who we will continue to work closely with, supporting both them and their clients.”