At the end of last month we wrote a story about the battle for the future of LV=. It was one of the hottest topics in the industry, raising the question of who the deal was best for. Now it is time to look at the result and what it means for the company going forward. As the home of IFAs in Scotland and the best place to find independent financial advisers in Kirkcaldy, we want to give our expert input.
What was the proposal?
The board at LV= was proposing to sell the insurance mutual to Bain Capital, a US private equity firm. A price of £530million was set. However, the proposal would result in demutualisation of the company.
There was a lot of controversy surrounding the sale. The main criticism was that the deal did not look like it was in the best interests of policyholders. With a mutual, each policyholder is an owner of the company. There are even some policies that give the holder a share of the profits. But, they would lose this with the sale. In return members would have received around £100 each. It definitely didn’t look like a good move.
The 1.1 million voting members from LV= had to decide whether to agree to the sale or not. They had to cast their vote by December 8th or at a meeting on December 10th. For the deal to go ahead there had to be at least a 75% approval. However, only 69% were in favour.
This is a good result for mutuals as a whole. It shows there is still a lot of demand for the kind of service and benefits they can offer. This is supported by the fact that mutual building societies still account for good market shares of residential mortgages, cash savings, and ISAs. These are 23%, 18%, and 40% respectively.
What happens now?
Following the decision not to sell, the chairman of LV= Alan Cook said the company would continue their commitment to provide the highest standards of service. He also confirmed the decision would not mean any changes to member’s policies.
LV= will now reassess its strategic position and alternative options. Sadly the company is in a difficult situation with a number of problems to resolve. However, experts have already said that other mutuals have been able to navigate similar problems.
One thing LV= will look at now is whether they can retain mutuality. The voting members showed how important this is to them. They will look at whether they can remain a mutual as a standalone business or by merging with a larger provider.
Royal London has already been working to arrange a merger. In fact, they wanted to speak with LV= when a sale was first proposed but the focus was on selling to Bain. Now however LV= has said they will consider the offer. Royal London sent them a preliminary merger proposal on December 8th. It would allow the company to retain mutuality and protect the interest of LV= customers.
Working with independent financial advisers in Kirkcaldy
Find It Near Me is an excellent company to work with if you want to choose an IFA in Scotland. We can give you the support in finding someone who will meet your specific needs. This will ensure you get the exact services you need.
So, if you want to find independent financial advisers in Kirkcaldy or other parts of the country, try us. You can have confidence in our recommendations and get in touch to tell us what you need help with. It could be pensions, investing, and many other things. You can also contact us for advice.