Insurer LV= reveals £33m failed deal costs while boss handed £511,000 bonus

Mutual insurer LV= has revealed it forked out £33 million in costs for its ill-fated deal with Bain Capital while the group’s boss also landed more than £500,000 in bonuses despite the failed tie-up.

Full-year figures from LV=, which was formerly called Liverpool Victoria, show the group paid £21 million in 2021 for costs related to the strategic review and Bain bid, on top of £12 million in 2020, with a further small amount due in 2022.

In its annual report also out on Tuesday, the group said chief executive Mark Hartigan picked up a £511,000 bonus for 2021 on top of his £435,000 salary even though earnings tumbled 22%.

It comes despite a difficult 2021 for the 179-year-old mutual, which saw it take centre stage in a controversial takeover saga that ended in its 1.2 million members voting down the proposed £530 million sale to private equity.

Communications with members in the run up to the vote were widely criticised, while politicians also hit out at the deal amid concerns over LV=’s future in the hands of a private equity firm, the payouts being offered to members and motives behind the sale.

The group’s results show operating profits fell to £31 million in 2021, down from £40 million in 2020 as costs of the failed bid weighed on its performance, with figures also dragged lower by investment and debt interest.

It fell to a pre-tax, pre-member bonus loss of £66 million last year, against profits of £37 million in 2020 as it was impacted by interest rate swaps.

But the group insisted the underlying performance of the business was solid, with trading profit surging to £29 million from £9 million in 2020 as it boosted new business.

Interim chairman Seamus Creedon said: “The business did not stand still while the strategic review was undertaken and since 2020 LV=’s executive team, led by Mark Hartigan, has been working hard to improve the commercial performance.”

Members voted against the Bain deal last December despite LV= bosses insisting it was the only deal that would secure its future.

Under the Bain deal, they would have handed over ownership of the group in return for £100 each while with-profits members would have been given an additional boost when their policies matured, but the payouts were seen as being paltry.

It also emerged that rival Royal London had offered a higher £540 million to merge with LV= before the board backed the Bain deal.

Royal London then rekindled talks over a possible merger after the Bain vote, but both sides ended up walking away.

In its results, LV= said it had overhauled the business in the two years since the strategic review first started.

Mr Hartigan said: ““LV= has outperformed both our new business volumes and profitability targets with significant growth in sales and trading profit.

“Thanks to the progress of our plan to transform the business we start 2022 well capitalised and clear in our future plans.”

The annual report showed that Mr Hartigan’s total pay fell to £1.01 million in 2021, down from £1.2 million in 2020.

While he still picked up a bonus it was lower than the £694,000 he was awarded in 2020.