LV= sells savings & retirement businesses to Bain Capital
UK-based general insurer LV= announced that it has reached an agreement on the terms of a transaction with funds advised by Bain Capital, a global private investment firm, to acquire LV=.
Bain Capital will pay £530m to acquire LV=’s savings & retirement and protection businesses, representing a multiple of 0.9x for the Solvency II Own Funds of £606m as at September 2020 and a multiple of 1.05x for Economic Own Funds of £506m. Under the proposal LV=’s With-profits business will be ring-fenced in a separate fund and closed to new business. The capital available for distribution is expected to increase by up to 40% as a result of the transaction and will be used to increase payments to With-profits members as their policies mature. Their long-term interests will continue to be protected by an experienced With-profits Committee.
The acquisition is subject to regulatory approval and approval from LV= members. It is expected to complete by the end of 2021, subject to the conclusion of the legal process.
“As a newly standalone life and pensions business in an increasingly competitive market, the Board recognised that LV= required significant long-term investment to be sustainable. This transaction is the culmination of an extremely thorough and robust strategic review – followed by a structured sale process to secure the best long-term future for our members, employees, other stakeholders and the business. The Board is delighted to have secured an attractive price and unanimously agreed that the transaction with Bain Capital presents an excellent financial outcome for all our members, as well as offering an unrivalled commitment to LV=’s future prospects, business and people. We look forward to engaging fully with our members in advance of a member vote in the first half of 2021.” – Alan Cook, Chairman of LV=.
“The partnership with Bain Capital recognises the opportunity to further invest to develop LV= at a time when it is well positioned, growing market share, expanding its products and trading resiliently, despite the pandemic. While our corporate structure will change, our culture and values remain the same. The Board is excited by the opportunities it creates for our people, partners and customers – enabling the LV= brand and business to further develop as a major force in the UK life insurance market.” – Mark Hartigan, CEO of LV=.
“We are delighted by the opportunity to provide long-term support to LV=’s Board of directors and management team on this transaction, which delivers certainty and value to LV=’s members. We are investing in a unique company with an impressive management team and employee base, that is already well positioned in the market, with a clearly established product set, strong IFA relationships and a reputation for customer excellence. We have been impressed by LV=’s initiatives to further improve its market position, the benefits of which are already emerging. Our principles and values are in direct alignment with those of LV= and we firmly believe in a shared vision for the future of the business. We look forward to working collaboratively to achieve these shared goals, which include delivering profitable growth, while preserving LV=’s strong financial position, independence and rich heritage dating back to 1843.” – Matt Popoli, Global Head of Insurance, Bain Capital Credit.