It was a year ago when Liverpool Victoria Financial Services Limited (LV=) said it couldn’t make mutuality work anymore; now the insurer has had a change of heart, with incoming interim chair Seamus Creedon explaining LV=’s stand in a message to members.
Creedon, whose statement comes after failed deals with private investment firm Bain Capital and pensions giant Royal London, noted: “In December last year, we put the transaction with Bain Capital to members and were sent a clear message when the proposals were not approved. Put simply, the value that many placed on ownership and voting rights came above the financial advantages of the proposed transaction.
“We have listened to members’ feedback on the importance of retaining mutuality and membership, and a future for the LV= brand. With 10 years of experience of the mutual sector, my role is to rebuild the LV= board to better direct and support LV= CEO Mark Hartigan and his leadership team so that they can continue to strengthen and grow our mutual business. With the executive search well underway, I hope to be in a position to confirm some of the new board appointments shortly.”
“The strategic review in 2020 and proposed transaction with Bain Capital took place against the backdrop of a global pandemic and significant market uncertainty, and we fully believed that the transaction with Bain Capital represented the best financial outcome for our members,” continued the current non-executive director, who highlighted that LV= is now in “a very different place” to where it was one and a half years ago.
“During the voting process, both the board and Mark fully expected that the LV= brand, business, and people would be lost if the vote did not pass. However, in light of the improving business performance over the last 18 months, the board has been able to be more considered in its assessment of future options, including that the proposed merger offers with another mutual would not be beneficial for our members.”
In an update last week, it was revealed that talks with rival Royal London had ceased after it became clear to LV= that their different mutual models mean that merging would not be in the latter’s more than one million members’ best interests.
Read more: LV= and Royal London deal breaks down
Taking on the interim chair post at the end of March, Creedon went on to highlight: “I’d like to update you on some of things that we have done to transform our business: a reposition of our business to focus on targeting customers where the LV= brand and products are most competitive; we have strengthened our leadership team with a new chief financial officer, chief operating officer, and chief risk officer; we have improved our products with enhancements to our smoothed investment range, income protection, and critical illness products – these are proving very popular with financial advisers and their clients.
“We have also made good progress on our IT transformation including a new equity release system; our ongoing IT investment plan provides more certainty on the future investment needs of the business and enables careful management of our capital. I can reassure you that we are well-capitalised and trading strongly. Your policies are secure and protected with all the same safeguards that you have always had. For our with-profits policyholders, there is no change to the way we determine your mutual and exit bonuses.”
Creedon stressed that the strength of LV=’s business performance, along with its operational progress, has allowed the insurer to look at the business differently. It was also pointed out that LV=’s board has reviewed all its existing options.
“As a result,” he said, “the board’s belief in the continuation of LV=’s status as an independent mutual and the opportunities this presents for our members, customers, employees, and wider communities has strengthened. In the coming weeks we will be arranging a series of member webinars so that we can share in more detail why we’re confident that staying as an independent mutual provides a sustainable future for LV=.”
