US bidder: Our deal only way to save LV

PRIVATE equity firm Bain Capital has mounted a staunch defence of its controversial takeover of LV by saying it ‘will save the business’ and preserve the historic brand.

In a rare public intervention, Bain said that its £530million bid for LV is ‘obviously the best option’ for the life insurer’s 1.2million members and claimed that alternatives could be bleak.

Matt Popoli, global head of insurance at Bain, told The Mail on Sunday that the US firm’s plan is ‘better’ than the alternatives, despite a backlash over its offer to pay members £100 to give up their mutual status.

He said: ‘We want to grow the brand, maintain the business and turn LV back to what it used to be, one of the most competitive providers of protection, savings and retirement products in the UK.

‘That is surely better for consumers than allowing some other insurance company to come along and swallow it up, discard the brand and jobs.

‘We’re going to save the business. We’re paying out money to policyholders, we’ll be enabling them to pay down debt and we’re investing to grow the business and that’s why we think this is the best option for members and employees.’

His comments come less than two weeks before the deadline to vote on the proposal. LV needs to secure 75 per cent of members’ votes for the deal to go ahead.

Bain’s offer, which beat 11 other bids, has been widely criticised. Politicians have accused Bain of offering a ‘paltry’ sum to LV members in return for sacrificing mutuality – meaning the company will no longer be run for the benefit of customers.

The deal has also come under pressure as rival mutual Royal London is waiting in the wings to swoop in for a potential merger with LV.

The MoS revealed that Royal London boss Barry O’Dwyer wrote to LV proposing a deal if members vote against the Bain offer.

Sources told this newspaper that O’Dwyer is considering a full-blown merger with LV, which would mean members get to keep their mutual status under Royal London.

The LV brand, which refers to the original Liverpool Victoria insurance company founded in 1843, would likely be sold as a result.

Popoli said: ‘I don’t see how one large mutual coming along and consuming LV is good for either customers or employees of LV.’

He insisted that the alternatives to the Bain deal were stark. Popoli believes LV is ‘sub-scale’ and in desperate need of investment to remain competitive, and so has committed to invest £160million. ‘Put simply, LV can’t continue as it is,’ he said.

Popoli added that if members vote against the deal, ‘the alternative would be no £100 for every member. Then there’d be no payments of close to £2,000 on average for with-profits policyholders.

‘I think that LV was in much worse shape than was probably understood by the market when we were asked to get involved last year.

‘The other options would involve the brand being discarded, closure of the sites perhaps and a significant reduction in the number of jobs for LV staff.

‘If the business continues on its own, members get no payments and all the future risks are handed to the with-profit members.

‘Then I suppose there’s always closure. This is costly. It would mean no payments to members. All the jobs would go and obviously the LV brand goes too.’

He added that Bain will ‘introduce more products, better customer service, better digitalisation’.

A deal for City advisers... NOT the members of LV Jeff Prestridge: Pages 130-131