Takeover could end in tears, say experts

TONY HAZELL, Money Mail letters editor

Why would a bunch of American investors want to buy a modestsized insurance company owned by its members? Because they can sniff a fast buck.

Private equity is the antithesis of mutuality. It is about maximising profits for a few rather than fair shares for all.

Mutuality lay at the heart of family finances for more than two centuries. Then short-term greed undermined the sector. That ended in tears as nearly every former mutual was forcibly taken over to prevent savers losing everything.

Now LV investors are being encouraged to give up their mutuality for a handful of private equity cash, by directors who will stuff rather more into their own pockets.

MARTIN SHAW, chief executive, Association of Financial Mutuals

IT’s sad to see a once great mutual in such a weak position that it has to sell its mutual soul to the wolves of Wall street. One advantage a mutual has is the flexibility to run the business without too strong a focus on profits, and in the interests of customers.

The money from Bain will yield a paltry £100 per member — next to nothing compared to everything members will lose.

SYLVIA MORRIS, Money Mail’s savings guru

Savers pick mutuals because they like the idea of owning the organisation looking after their money. All profits benefit them rather than going to outside owners. Insurance companies owned by outsiders typically earmark 10 pc of profits for themselves on a so-called with-profits investment fund. With a smaller share of the profits, the final payouts of LV savings policies could fall.

ROS ALTMANN, former Pensions Minister

IT Is very difficult to see how customers can expect to benefit from this deal. The financial ‘reward’ of a paltry £100 is unlikely to compensate for the increased future risks they face. They are currently invested in a firm which is not seeking to make profit, but this will be replaced by an owner which aims to earn good returns.

JAMES DALEY, Fairer Finance

Almost all financial services scandals of the past few decades have — in my humble opinion — been caused by firms prioritising shareholder returns over good customer outcomes. I’ve always been a fan of mutuals because that tension between customer and shareholder does not exist — they are one and the same.

I struggle to think of a single large financial services business that improved customer performance after moving into private equity ownership. I hope members will vote against and force the management to think again.

HELEN MORRISSEY, senior pensions and retirement analyst, Hargreaves Lansdown

Some of the most highly respected brands in the UK are mutuals. Their roots are in helping support the poorer members of society, there are no shareholders to pay and they are owned by their customers so there is a laser focus on doing the right thing by them.

The tone has been set with reports that policyholders have been offered just £100 each to approve the takeover, a relatively small amount for signing over membership rights.