The Financial Conduct Authority (FCA) has shared detailed information on the sale of mutual insurer LV= to private equity firm Bain Capital.
In a letter to the chair of the All-Party Parliamentary Group for Mutuals, Gareth Thomas, the regulator said it met with the LV= board three times as part of its supervisory work, as well as with a group of non-executive directors to discuss the change in control for the firm.
It also had a meeting with the chair of the with-profits committee and the with-profits actuary.
But for the demutualisation process to begin, the FCA said LV= members will need to vote for two resolutions.
The first relates to the acquisition by Bain Capital, where 75% of eligible voters will need to be in favour of. Any member that has held a qualifying product continuously for 12 months is eligible for the first vote.
The second resolution will ask members to amend LV=’s constitution to remove the minimum 50% turnout threshold required for a vote on a transaction “which transfers LV=’s business to a company that is not a mutual”, said Matt Brewis, the FCA’s director of insurance and conduct specialists.
A majority number of members who vote, representing 75% by value, is needed for the second resolution to be approved.
Contrary to the first one, those that were registered as members at least 49 days before the vote can have their say.
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According to the FCA, LV= has 1,220,533 customers and, of those, 1,150,469 are also members and would “potentially be eligible to vote” subject to the criteria above.
Brewis added that LV= had already undergone an extensive tracing campaign in 2018/19 to reconnect with members it had lost contact with, when it converted to a mutual company limited by guarantee. Additionally, in May 2021, the firm reviewed its member register mailing records by using a national register.
For the voting process itself, LV= is using an external provider, Civica, which also provides ballot services for the British government.
Brewis said: “All postal, online and in-person votes will go straight to Civica with no LV= involvement on the counting or processing of them. The involvement of an external provider in this capacity adds independence to ensure that the process is fair and transparent.”
All eligible members will have received a vote pack containing a letter on the transaction with voting forms, an explanatory booklet, and a letter from Bain Capital.
The watchdog also approved the appointment of two independent experts, Oliver Gillespie and Simon Grout. Gillespie has been considering the overall proposed transaction with Bain Capital, while Grout will step in if members vote for the second resolution.
But the FCA could not provide any additional information regarding Royal London’s involvement in the deal; information about the departure of former chief executive Richard Rowney and his pay; and the likely remuneration to the LV= board after the sale to Bain Capital, as this is confidential information which the regulator is not allowed to disclose under the Financial Services and Markets Act 2000.
