LV Members’ £ 43m Acquisition Bill: This is the amount of life insurers spend on controversial sales to American private equity sharks


LV Members’ £ 43m Acquisition Bill: This is the amount of life insurers spend on controversial sales to American private equity sharks

LV members need to raise £ 43 million to cover the historic insurer’s controversial sale to private equity sharkbine capital.

Bosses at LV have refused to disclose to bankers, lawyers and other consultants what they are spending as they seek to push sales.

But a document clipped on LV’s website – a document written by consultancy firm Milliman, states that LV has paid an ‘independent expert’ to oversee the deal – with total costs estimated to hit £ 43million.

Cost: The document on LV’s website, written by the consultancy firm Milliman, has paid for the LV contract as an ‘independent expert’, with total costs estimated to reach £ 43m.

The bill covers all costs associated with the transaction, including fees paid to consultants. A large portion of the money will be handed over to Fenchurch, an investment bank run by Tory party treasurer Malik Karim, who advises LV.

Other clothes taken by insurers to work on the deal include City Spinners FTI Consulting and law firm Clifford Chance.

Former Pensions Minister Baroness Altman said: ‘I don’t see what value the members are getting and how the company justifies that level of fees for the deal they offer.

‘It’s a job for the guys. It doesn’t look like a good deal for members but it looks like a fantastic deal for managers and their consultants. ‘

The £ 43million bill is £ 36 for 1.2m LV members who own a mutual. They are asked to hand over ownership to Bain in lieu of just £ 100 each, and a moderate uplift for those with more generous ‘profit’ policies.

City regulator’s ‘harmful negligence’

The City Watchdog has been drawn into the future of LV because experts have accused it of doing too little to protect members of the insurer.

The Financial Conduct Authority (FCA) has blessed the acquisition of LV by US private equity firm Bain Capital.

The FCA says its role is to look at the agreement and make sure the proposals treat customers fairly and that they do not face any ‘adverse effect’.

But Martin Shaw, head of the Association of Financial Mutuals, said the FCA could have done more and suffered from a culture of ‘benign neglect’ at the hands of governments and regulators.

The full spectrum of fees has emerged as LV bosses have exploded a series of ‘defects’ over the controversial sale of a 178-year-old insurer formerly known as Liverpool Victoria.

At a parliamentary inquiry into the future of the mutual sector, MPs were told there was a lack of information needed to vote on the £ 530 million acquisition of LV members.

LV Chairman Alan Cook and Chief Executive Mark Hartigan have been criticized for their lack of communication and lack of transparency.

It is only two weeks before the contract vote ends on December 10.

Giving testimony to the Treasury Committee, Martin Shaw, head of the Association of Financial Mutuals, said: ‘There are many flaws in their approach and I think if the directors have their time again, they will improve the quality of communication. ‘

Shaw alleges that LV was riding on protection to prevent ‘carpet-bagging’ from economic opportunists in the hope of making quick money.

They criticized Cook and Hartigan for a ‘potential conflict of interest’, as both were hoping to keep their jobs after the deal.

Hartigan has admitted that if he remains a boss he can get a higher pay package and an equity stake in the firm – potentially worth millions.

Shaw said: ‘It’s a difficult position [Hartigan and Cook] They find themselves as they look to retain their roles. If they just move aside, it’s the black-and-white talk they’ve led, but then they move back.

Shaw, Mike Regnier of the Yorkshire Building Society and Lucky Chandrasekhar of the London Mutual Credit Union, testified that the loss of another member-owned company was not good for consumers.

An LV spokesman said: ‘This estimated cost covers all aspects of the transaction until it is completed in more than two years.

“It takes into account the regulatory process, the two court processes, the vote of the members and the two independent experts and all the operational aspects.”




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