LV= has revealed it paid £33m in costs for its failed sale to US private equity firm Bain Capital, while the mutual’s boss received a £500,000 bonus despite the unsuccessful transaction.
Full-year figures released by the Bournemouth-based insurer, formerly known as Liverpool Victoria, show the group paid £21m in 2021 for costs related to the strategic review and Bain bid, on top of £12m in 2020, with a further small amount due in 2022.
In its annual report, also published on Tuesday (March 29), the LV= said chief executive Mark Hartigan was paid a £511,000 bonus for 2021, on top of his £435,000 salary, even though earnings dropped by 22%.
The report showed Mr Hartigan’s total pay fell to £1.01m in 2021, down from £1.2min 2020, and while he still picked up a bonus it was lower than the £694,000 he was awarded in 2020.
It comes after more than a million of the 179-year-old mutual’s members failed to vote through the proposed £530m Bain deal, despite Mr Hartigan saying it was the only deal on the table that will protect about 1,000 jobs in the South West.
The company’s senior leadership had said the deal would be the “best financial outcome” for its members, and would provide the required investment it needs to compete with insurers with access to big capital in the competitive life and pensions market.
Former chairman Alan Cook said he would step down following the vote in December.
The group’s results for the year ending December 31 2021 showed operating profits fell to £31m, down from £40m in 2020, as costs of the failed bid weighed on its performance, with figures also dragged lower by investment and debt interest.
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It fell to a pre-tax, pre-member bonus loss of £66m last year, against profits of £37m 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 £29m from £9m 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.”
Fellow mutual Royal London had offered a higher £540m merger deal before LV=’s board backed the Bain deal. Following the collapse of the Bain deal LV=confirmed it had held “exploratory talks” with Royal London 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.”
As well as it head office in Bournemouth, LV= also has bases in Exeter and Hitchin, Hertfordshire.
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