With next month’s vote on the proposed £530m sale of insurance mutual LV= to US investor Bain Capital drawing closer, the Co-op Party is urging supporters to write in protest against the deal.
Writing on the Party’s website, Labour/Co-op MP Alex Sobel said: “I am a member of the insurance firm LV= because, as a mutual owned by its customers, I believed that LV= would always place people above profit. But all that is about to change.
“Millions of LV= customers will lose their ownership rights and their ability to have a say in the company’s decisions. Private equity firms like Bain Capital have a history of stripping assets, raising prices and slashing jobs. That’s why in the ballot of LV= members, I voted against the sale – and why I’ve written to the chairman of LV= asking him to reconsider and stop this sell-off.”
Asking supporters to co-sign the letter, he added: “LV= members are fighting back – but in the face of international investment giants, we cannot do it alone.
“LV= was founded to ensure even the poorest in Victorian Liverpool could afford the dignity of a proper funeral. Since then, like other co-operatives and mutuals, it has pioneered a fairer way of doing business – working in the interests of customers, not distant shareholders.
“Over the past decades, too many of our historical mutuals have been sold off and their members sold out. We need every single supporter of our combined labour, co-operative and trade union movements to stand together as one.”
Mr Sobel’s call to action comes after reports in the Mail on Sunday that Royal London mutual will offer a merger deal to LV=’s board if its members vote against the Bain deal. The vote, on 10 December,
The vote, on December 10, needs the backing of three quarters of voting members. It follows months of scrutiny and criticism of the proposed deal, with MPs on the All Party Parliamentary Group on Mutuals investigating the plans and preparing a scathing report on the process. Compiled with sector thinktank Mutuo, the report highlights concerns over the transparency of the deal, consultation of members and the role of regulators.
There have also been reports that LV= had rejected an earlier offer from Royal London which would have preserved its mutual status.
Royal London has declined to comment, while a spokesperson for LV= said: “The board concluded that Bain Capital offered greater value to LV members when compared on a like-for-like basis and would result in greater and more certain payouts to members, on a more accelerated basis.”
In a bid to win members’ support for the Bain deal, LV= has released details of the strategic review which prompted last year’s decision to sell.
The review found that the mutual was a “sub-scale life and pensions business with an insufficiently strong capital structure” and continuing as normal would not be fair for members, because money earmarked for their future payments would be needed for tech investment.
In its statement, LV said the deal would allow it to return £616m in capital to its members, and would bring in expertise and capital investment from Bain while maintaining LV’s presence in Bournemouth, Hitchin and Exeter.
“There have been numerous theories and opinions about the process and decision. So that members can vote with the facts in front of them, we are showing the analysis we did and the conclusions we reached,” said LV= chair Alan Cook.
Board member David Barral added: “Having considered 12 bids we unanimously concluded that the best outcome for our members, employees and all of our stakeholders was the proposed transaction with Bain Capital. It was a decision we didn’t take lightly given our mutual heritage.”
But Labour / Co-op MP Gareth Thomas, chair of the APPG on Mutuals, is keeping up his campaign. In a letter co-signed by APPG members Kevin Hollinrake MP and Lord Ian Wrigglesworth, he asks Mr Cook for more details on the original Royal London offer.
He also asks Mr Cook why the planned £100 payment for LV= members if the sale goes through “is so low”, whether there was any dissent on the LV= board about the proposed sale, and whether there are job cuts planned at the business.
The letter adds: “Can you offer any guarantee that there won’t be any reduction in head count in the first 18 months of the new board’s tenure?”
In the House of Commons today, Mr Thomas made a point of order, saying: “The current chief executive of LV= is claiming that all of the bids received by LV= would have led to demutualisation and loss of membership rights. I understand that this may not be the full story and that the tender document issued to Bain and others may have been specifically written with demutualisation in mind.
“I also understand that the full new board of LV=, if the deal goes through, have been approved by the FCA but are being kept secret by Bain.”
Mr Thomas asked the deputy speaker Eleanor Lang for advice on “how to encourage Treasury ministers to persuade the Financial Conduct Authority to publish in full the detail of the new board and the tender document so that our constituents, who are members of LV=, have all the relevant information in front of them before they decide how to vote.”
Dame Lang told Mr Thomas to take the matter to the Table Office for guidance on how to take the matter forward with ministers.
