LV= is currently burdened with debt and large pension liabilities.

This morning LV= released further details on the strategic review it underwent in 2020, and how the Bain Capital transaction - a deal to takeover LV= - was compared with other options.

LV= revealed that 12 bidders, including Bain, expressed an interest in buying the business.

LV= announced a controversial acquisition by Bain in December but has faced resistance. 

The strategic review concluded that LV= was a sub-scale, life and pensions business with an insufficiently strong capital structure and a loss-making new business unit, in need of investment.

It concluded that pursuing a ‘business as usual’ strategy as an independent mutual was not fair for members given the need for investment, the associated high risks and the possibility that many members would not see a return.

Alan Cook, chairman of LV=, said the firm chose to release the details of the strategic review due to numerous theories and opinions being expressed in the market about the process and decision.

He said that by providing members with the analysis and conclusions reached in the report they will be able to vote with the facts in front of them.

Rival provider Royal London had also originally expressed an interest in acquiring LV=.

LV= confirmed that Royal London made another bid to buy the provider earlier this month.

Mr Cook said he was disappointed by the timing of Royal London’s intervention just ahead of a crucial member vote on its deal with Bain. 

David Barral, senior independent director of LV=, said: “Our board carried out a careful and detailed strategic review of LV= in 2020. We examined all the options, drawing on our own wide business and transaction experience and that of our professional advisors.

“We all came to the firm conclusion it would not be fair for us to ask our with-profit members to finance a future that requires significant investment, which many would not benefit from.

“Therefore, we explored an external transaction and having considered 12 bids 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 we know it is the right choice because it saves the future of LV=.”

The board of LV= continues to unanimously recommend the transaction with Bain.

LV= has started the process to towards demutualisation in the latest step in its sale to Bain but members must vote in favour of the acquisition proposals.

Members are set to receive a share of £111m in one-off payments should the deal with Bain go ahead via a Part VII transfer. This type of insurance business transfer scheme requires backing from a court hearing and members voting in favour.

LV=’s articles of association need to be changed via a scheme of arrangement in order to transfer the ownership of the business to a Bain-controlled entity, effectively demutualising the provider. It also requires the backing of the Financial Conduct Authority. The regulator gave the green light to the provider last month.

Alongside the proposed £111m payment to members, Bain also projected £101m of “policy payout enhancements” for members. Total payments to members under the deal could be £212m.

Bain has committed to spending £160m on IT modernisation, business operational improvements, product development and customer service funded from operating cashflows for LV= should the deal go ahead.

However, critics have warned that widespread redundancies at LV= are possible.