ALEX BRUMMER: Royal London’s long game in battle for insurer LV

The battle that has been unleashed for control of LV and the mutual insurer’s 1.2m policyholders is an unedifying spectacle.

In its determination to bulldoze Liverpool Victoria members into accepting an offer from Bain Capital, the senior LV team of controversial chairman Alan Cook and chief executive Mark Hartigan have been less than frank with members. 

There is a long-standing claim that an offer from mutual consolidator Royal London would be less advantageous for LV with-profits policyholders.

Moreover, it is argued that under Royal London’s ownership, mutual status for LV members would have to be surrendered.

That is misleading, as Royal London says it would be willing to preserve LV’s mutual status. The merger process would take longer in that members of both firms would need to vote the deal through and it would need a fresh imprimatur from regulators.

The real problem with all the charges and counter claims is that there is no independent arbitrator to ensure the verities of what is being said, along with an orderly process with a formal timetable.

There are no offer documents, no audited forecasts from either side and no sighting of the consultant and investment banking fees going to LV advisers Fenchurch. Standards fall below those in any other bid tussle.

 It is shameful that when the savings of ordinary policyholders are at stake, the process is such a shambles. 

And hugely frustrating that the flaccid enforcer, the Financial Conduct Authority, has so far washed its hands of the sorry matter.

The most salient fact is that life and pensions policies are for the long-term and private equity is the quick flip. 

That’s why LV customers must reject the Bain deal, demand fresh leadership and seek a longer life for their savings with Royal London.

Strong Arm

The difference between Theresa May’s government and Boris Johnson’s with regards to damaging overseas takeovers could not be more acute.

This is demonstrated by the decision of Culture Secretary Nadine Dorries to launch a full-blown competition and national security investigation into the proposed sale by Softbank of Cambridge-based smart-chip maker Arm Holdings to bigger rival Nvidia.

Had May and her timid team been more willing to place sand in the wheels of foreign takeovers, not only would Arm and its workforce have been saved the trauma of ownership uncertainty, but the UK’s defence and satellite capacity would not have been denuded by the sales of Cobham and Inmarsat.

GKN may have needed a shake-up but it could have avoided the ‘buy, improve and sell’ model at Melrose.

Simon Peckham and his team at Melrose may have done a fabulous job in refurbishing GKN’s auto and aerospace operations, but it will all be for nothing should the EV technology and sensitive aerospace tech end up in overseas hands.

The Nvidia-Arm deal now faces serious scrutiny in the UK, the United States and European Union.

Given the regulatory challenges and the delays, it would not be that surprising if even someone as ambitious as Nvidia founder Jensen Huang were to withdraw from the fray and think about spending the £30billion or so outlay committed to Arm on other investment choices. 

The mercurial boss of Softbank, Masayoshi Son, having sacrificed his long-term ownership pledges for Arm might also think again.

The ideal outcome for the UK and its global future would be to bring Arm back to the public markets with a London initial public offering.

There would be questions as to whether the London Stock Exchange is capable of absorbing a float of the scale of Arm, far bigger than Glencore and the very disappointing The Hut Group (THG).

But it did aggressively want to bring the far bigger Aramco IPO to London.

With willpower and purpose, reshoring Arm and its valuable intellectual property to the UK ought to be a no-brainer.

Missed calls

Post-pandemic myths are legion. Thanks to Rishi Sunak’s furlough, the Office for Budget Responsibility forecast of 12 per cent unemployment could not have been more wrong as jobless queues shrink and vacancies surge.

The tanker driver shortage, which had panicked motorists queuing for hours, was nothing more than a nine-day wonder.

Similarly, predictions from the noisy farming lobby that 100,000 pigs would have to be destroyed and there would be no turkeys for Christmas has proved to be scotch mist.

Make your voice heard on LV 

We are encouraging LV members, customers, or others, who would like to see it retain its mutual status, rather than be bought out by private equity,  to write to it.

You could use the wording from the letter printed in the Daily Mail newspaper’s City pages (pictured here).

We have included the words for you to copy and paste into a letter below. 

Send it to Alan Cook, Chairman of LV=, Liverpool Victoria, County Gates, Bournemouth, BH1 2NF 

Dear Alan Cook,

I, the undersigned, urge you to reconsider your decision to sell LV= to Bain Capital and instead maintain its mutual status.