The suitor for insurance giant LV= has hit back at critics of the deal, warning members they may miss out on any payout if they do not vote for the £530 million bid next month.
US private equity firm Bain Capital won an auction process for the 178-year-old mutual earlier this year but has faced a backlash over the proposals.
However, Matt Popoli, Bain’s global head of insurance, told the PA news agency it is the right deal to save the business.
He said: “Our transaction will result in the highest amount of payout to policyholders – full stop. There is no other proposal that will result in higher payout to policyholders.
“There have been these catchy headlines. There are a lot of soundbites, but, if you actually look at what is in the best interest of policyholders, it is really hard to argue that this transaction isn’t in their best interests.”
He added: “Short of our deal I don’t think the members end up getting any kind of payouts.”
LV=, previously known as Liverpool Victoria, sold its general insurance division to Allianz for £1.1 billion in 2017, leading many of its members to believe the rest of the business was safe and ready for investment.
But mismanagement and poor communications followed, with the money earmarked for paying off debt and handing it out to members. None was used for investment.
Mr Popoli said Bain will invest £160 million into LV= to improve IT systems and launch new products to increase the number of policyholders from 1.2 million to 2 million.
It will be the first time Bain has invested in a UK-based life insurance business, although it does own motor and home insurance firm eSure.
Other firms it has been involved with include Worldpay, which it floated on the stock market in 2015, and Bain owned a stake in Burger King that was sold in 2010.
Asked why the sale of the insurance division failed to do enough to save the remaining LV= business, Mr Popoli said: “Bluntly, the company was in much worse shape than I think the market understood.”
Rival Royal London, which was also one of the 12 bidders for LV=, has recently launched an offensive, trying to knock Bain off course, and claimed the insurer would be better off remaining a mutual.
But Mr Popoli said: “The values of LV are not going to change as that’s what it’s been doing for the past 178 years. It did that as a mutual company and it will do that as a non-mutual.”
He added: “What we’re going to do, if successful in the vote, we are going to be the ones that save jobs, save office locations, invest in the business and ultimately, hopefully, double the size of the business – all of that while paying out hundreds of millions of pounds to the policyholders, paying down the debt and helping fill the pension hole.
“This is the best outcome for members and for employees across the across the country.”
One criticism levelled at Bain is that the payout of £100 to LV= members should be higher, but Mr Popoli said this is simply the minimum level and will be much higher for many.
“The £100 is the minimum that everyone gets. On average, the number is probably 50% higher than that and the with-profit members will get even more than that, up to an additional £630.”
There has also been speculation that LV=’s current management could be in for a big payday if the deal goes through.
Mr Popoli would not disclose what incentives are being offered, but said: “The majority of the directors in voting for this deal are actually voting themselves out of a job.”
LV= has been on a charm offensive in recent weeks to try and win over members ahead of the vote on December 10 on the deal.
Bosses have warned a rejection could result in the business being closed, leading to job losses and the breaking-up of the company.
Bain has said it intends to “maintain a presence” at LV=’s three offices in Bournemouth, Hitchin and Exeter and grow the business into one of the top three life insurance firms in the UK.
The private equity giant also intends to pay off LV=’s debts and the company’s pension deficit as part of the deal.