Watchdog under fire over LV sale: FCA urged to reveal details of rival bid from Royal London which would have saved the insurer from private equity barons
The City watchdog has come under fire over its handling of the US private equity takeover of LV.
The Financial Conduct Authority (FCA) yesterday received a letter from the chairman of a group of MPs demanding that it release details about the circumstances surrounding the historic British mutual insurer’s £530million sale to Bain Capital.
The deal would see LV, formerly Liverpool Victoria, lose its mutual status. It would no longer be owned by its members but run by a profit-hungry investor.
Questions: The FCA has received a letter from the chairman of a group of MPs demanding it release details about the circumstances surrounding LV’s £530m sale to Bain Capital
MPs are interested in a rival offer from fellow British mutual Royal London, which would have saved the 178-year-old insurer from private equity barons.
They also quizzed the FCA on what it knows about the potential rewards being offered to LV bosses.
In a letter seen by the Mail, the chairman of the All Party Parliamentary Group for Mutuals Gareth Thomas asked the watchdog to confirm Royal London offered more money than Bain.
For legal reasons Royal London cannot confirm if its offer was higher, but it has been reported that it offered £540million for LV – £10million more than Bain.
A panel representing 340,000 with-profits LV members was said to have favoured the Royal London offer, initially rejecting Bain Capital.
Now MPs are demanding the FCA fulfils its ‘crucial obligation’ to protect consumers and publish what it knows about the rival offer.
Bosses ‘devious’ in forcing deal
LV bosses have been accused of being ‘devious’ in trying to force through Bain’s £530m takeover.
The mutual’s 1.16m members will be asked to vote on the 178-year-old mutual’s sale in two votes between now and December 8 – or at an online meeting on December 10.
One will be to approve the sale, another will allow LV bosses to override their constitution, which requires 75 per cent of members to back a private equity takeover, with a minimum turnout of 50 per cent.
Chairman Alan Cook has admitted it is ‘frankly impossible’ that so many members will vote.
To get around this problem those that do take part will be asked to vote to drop the turnout requirement.
Labour MP Dame Margaret Hodge described it as ‘devious and underhanded’.
The letter said: ‘It is now clear that the two most valuable bids received by the Liverpool Victoria board were from Bain Capital and crucially, another mutual, Royal London.
Will you confirm what many have explicitly suggested; that Royal London offered more money than Bain Capital?’
Thomas said the 1.16m members who own LV cannot make a ‘complete assessment’ of the bids without seeing the report.
Bain’s bid for LV has garnered criticism across the political spectrum.
Pay rise: LV chief exec Mark Hartigan (pictured)
Tory MP Kevin Hollinrake said: ‘The FCA needs to set out clearly the evidence and basis on which it has considered the consumer interest of the sale to Bain Capital.’
Members will be able to vote on the deal between now and December 8 or at a special meeting on December 10.
If it is approved, ordinary members will receive a £100 payout while with-profits members will be given an additional boost when their policies mature.
The deal has been slammed by members, who have called the £100 offer a ‘bribe’ and a ‘paltry’ sum.
Thomas also urged the FCA to release any information it has about how much chief executive Mark Hartigan and chairman Alan Cook will be paid if the deal passes. Hartigan has claimed he will gain nothing.
But it is understood he will receive a stake in the company and a pay rise potentially worth millions if members vote for the takeover.
Cook will stay in post earning £210,000 a year. Both would likely have lost their jobs under a deal with Royal London.
It is thought Royal London is waiting in the wings and could return with its own offer for LV if members reject the Bain deal.
LV bosses claimed ‘Bain Capital was the only option that offered both an excellent financial outcome for members and gave unrivalled support for the LV brand, our people and UK-based locations’.
Make your voice heard on LV
We are encouraging LV members, customers, or others, who would like to see it retain its mutual status, rather than be bought out by private equity, to write to it.
You could use the wording from the letter printed in the Daily Mail newspaper’s City pages (pictured here).
We have included the words for you to copy and paste into a letter below.
Send it to Alan Cook, Chairman of LV=, Liverpool Victoria, County Gates, Bournemouth, BH1 2NF
Dear Alan Cook,
I, the undersigned, urge you to reconsider your decision to sell LV= to Bain Capital and instead maintain its mutual status.