In the latest big acquisition news to sweep the insurance industry, Liverpool Victoria Financial Services Limited (LV=) has announced that it has agreed to the terms of a transaction to acquire LV=, with funds advised by private investment firm Bain Capital Credit LP (Bain).
Bain will pay £530 million to acquire LV=’s savings & retirement and protection businesses, representing a multiple of 0.9x for the Solvency II Own Funds of £606 million as at September 2020 and a multiple of 1.05x for Economic Own Funds of £506 million.
Under the terms of the proposal, LV=’s With-profits business will be ring-fenced in a separate fund and closed to new business. The transaction is expected to increase the capital available for distribution by up to 40% and will be used to increase payments to With-profits members as their policies mature. The long-term interests of members will continue to be protected by the With-profits committee.
The transaction, which is subject to regulatory approval and approval from LV= members, is expected to complete by the end of 2021. All eligible members will be given the opportunity to vote on the deal at a Special General Meeting which will likely be scheduled for the first half of 2021.
Commenting on the deal, chairman of LV=, Alan Cook noted that, 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. The deal with Bain is the culmination of a thorough strategic review, he said, as well as a structured sale process to ensure the best long-term outcome for members, employees and other stakeholders.
“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,” he said. “We look forward to engaging fully with our members in advance of a member vote in the first half of 2021.”
Meanwhile, Mark Hartigan, CEO of LV=, said that the partnership with Bain Capital will build on the opportunity to further develop LV= at a time when it is well positioned, growing its market share, expanding its products and trading resiliently.
“While our corporate structure will change, our culture and values remain the same,” he said. “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.”
Offering his thoughts on the transaction, Matt Popoli, global head of insurance at Bain said the firm has been delighted to provide long-term support to LV=’s board of directors and management team on the acquisition which he believes delivers “certainty and value” to LV=’s members. Bain is investing in a unique company with a strong management team and employee base, he said, and which is already well-positioned in the market. The principles and values of Bain and LV= are in direct alignment and there is a shared vision for the future of the business.
“We look forward to working collaboratively to achieve these shared goals,” Popoli said, “which include delivering profitable growth, while preserving LV=’s strong financial position, independence and rich heritage dating back to 1843.”
