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9 February 2022Insurance

Merger talks between LV= and Royal London break down; half the board quits

Merger talks between UK mutual insurer Liverpool Victoria Friendly Society (LV=) and Royal London have broken down after over a month-long discussion, LV= confirmed this morning (February 9). The news follows a major overhaul of its board that will see half of its members leave the business.

The mutual insurer confirmed it had discussions with its rival Royal London about a potential tie-up at the start of the year, after it failed to secure member approval for a planned sale to private equity firm Bain Capital in December.

“However, it has become clear to LV= that our different mutual models mean such a merger would not be in the best interests of LV= members,” the company said in a statement.

“As a result, talks between the two companies have now ceased.”

LV= noted that it now plans to move forward as an “independent mutual” following two failed merger attempts.

“We thank Royal London for its engagement and we look forward to operating alongside it as part of a vibrant mutual sector. The strength of LV=’s business performance over the past 18 months combined with its operational progress has strengthened the Board’s belief in, and commitment to, the continuation of our status as an independent mutual,” said Seamus Creedon, incoming chair of LV=.

Creedon added: “We have heard what our members have said about the importance of mutuality and the continuation of the LV= brand. We continue to maintain our strong capital position, are trading well and building a successful future for LV=, its members, employees and wider communities. We will shortly update our members on our business strategy and will continue to engage with them over the coming weeks and months.”

The news comes shortly after LV= unveiled a major overhaul of its board that will see half of its eight members leave the business.

With effect from April 1, Creedon will take over as interim chair from Alan Cook who indicated his intention to step down following the special general meeting in December 2021.

David Barral, who will reach the end of his six year term on March 7, will also step down from the board.

Additionally, at the end of March, Alison Hutchinson and Luke Savage will also step down as non-executive directors and members of the board.

Creedon said the board changes were in response to its members' feedback. “Put simply, our members told us that what they viewed as the modest financial advantages of the transaction, were not worth the loss of ownership and voting rights for our million-plus members,” he said.

“My task as interim chairman is to replace valued colleagues with a new chair and directors who will continue to develop LV= as a modern mutual insurer. I will be working closely with Mark Hartigan who has been doing an excellent job in strengthening the performance of the business,” Creedon added.

“The board takes full responsibility for the unsuccessful transaction which Mark actively advocated on its behalf and my colleagues and I have high confidence in him and his team,” Creedon admitted.

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More on this story

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10 December 2021   Demutualisation raised LV= member hackles.
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18 July 2022   Members of the mutual insurer rejected a takeover by Bain Capital late last year.
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26 September 2022   Current CEO Mark Hartigan has decided to step down after two years and will leave the business.