The vote required 75% of voting members of the mutual insurer to approve the deal, and only 69% of those who cast ballots approved of the £530m takeover offer. Member concerns about the takeover removing LV='s status as a mutual were expressed, and the board has indicated that it will now explore whether mutuality can be retained.
The firm has now said that while it 'continues to have an appropriate capital position', continuing to pursue a 'business as usual' strategy in the longer term would not be in the best interests of its members, given the declining with-profits membership base and level of investment needed.
Having made a previous proposal in 2020, Royal London made a new preliminary merger proposal to LV= on 8th December which LV= says is 'substantively different' to the previous proposal and now includes retaining the mutual structure. LV= responded publicly today to say that it would consider the proposal seriously with members and stakeholders' best interests in mind.
LV= chairman Alan Cook has indicated his intention to step down once a new strategy for the future business - which continues to trade as normal - has been agreed.
Alan Cook, Chairman, LV=, said:
"The Board remains committed to finding a solution to the challenges presented by a declining with-profits membership base. As we have said throughout this process, the growth and investment required to remain competitive over the long-term is not a fair or appropriate burden for our With-profits members to bear. This investment would delay and potentially impact the level of returns they could expect to see, given a quarter of our members are with-profits policyholders today and we expect over the next ten years this will reduce to only 10%. Therefore, as we move into 2022, I will continue to lead the process to find a way forward that will enable us to provide the right financial outcome for all our members whilst respecting their different wishes. However, I also confirm that as soon as a way forward is agreed that I intend to step down as Chair.
"As a Board, our fundamental responsibility has always been, and will always remain, ensuring the best interests of our members. We are also deeply aware of our duty of care to LV='s people and we will continue to do everything possible to find a solution that can deliver a continuation of the LV= brand and security for our 1,300 employees.
"The business is trading strongly and remains appropriately capitalised. As well as driving an improved trading performance, our CEO, Mark Hartigan, has delivered on the Board's requirements throughout this strategic process. The Board continues to provide its absolute and full support to his ongoing work to address the long term challenges facing LV=.
"We want to reassure policyholders that this outcome will mean no changes to their policies or our ongoing commitment to the highest standards of service from LV=. I would also like to say thank you to our people, who have worked so hard to support our customers during this process and to our adviser network who we will continue to work closely with, supporting both them and their clients."
