LV has hit out at rival Royal London after its latest bid to buy the insurer, calling the timing of its intervention “destabilising”.
Following reports, LV has confirmed an email was received from Royal London last week proposing the “dismantling” of its business in a three-way transaction with its current private equity buyer, Bain Capital.
But Royal London has disputed this and said it merely wants to take part in a "conversation" before LV members voted on whether to accept the Bain deal.
Next month LV will hold a member vote on whether Bain should buy the mutual insurer.
Reports suggested the deal would see Royal London buy the bulk of LV’s existing policies, while Bain Capital would buy the LV brand in an effort to attract new customers.
Today (16 November), Alan Cook, LV’s chairman, said Royal London’s latest proposal underlined its “lack of interest in supporting LV's new business franchise”, as well as “its intentions to break-up LV”.
He continued: "We are also surprised and disappointed by the timing of Royal London's intervention, which comes more than a year after we terminated our confidential discussions and is seeking to destabilise the conclusions of our comprehensive strategic review, in close proximity to what is a very important vote for our members.”
Cook said LV is now attempting to "clear up the fog” for its 1.2m members, in an attempt to “remove all the uncertainty and confusion” ahead of the member vote on December 10.
One detail LV highlighted in its statement today was that, contrary to reports, Royal London's initial proposal to buy the firm “would not have resulted in LV members having any membership rights in the enlarged mutual group”.
The insurer highlighted Royal London’s previous acquisitions of mutuals, including Royal Liver, Co-operative and Police Mutual, which saw no membership rights offered to the members of these mutuals.
“To describe Royal London's proposal as offering 'a mutual alternative, more favourable to LV members', is grossly misleading,” LV concluded.
Due diligence
Royal London’s initial bid for LV was rejected late last year, after the insurer reached the last two in LV’s auction process, losing to Bain Capital’s proposal - which David Barral, LV’s senior independent director, said today was “far superior to any proposal received from other third parties, including Royal London”.
LV has outlined a number of reasons why it decided to go with Bain Capital over Royal London. One was the latter’s refusal to pay for further due diligence.
“The board of LV was surprised and disappointed that Royal London declined LV's request to progress its due diligence investigations during the final stages of the process,” LV said today.
“In contrast to the position of other bidders in the process and general market practice, Royal London insisted that it did not wish to incur the additional marginal cost ahead of being granted exclusivity.
