A merger deal with Royal London could potentially be reached 'within days', reports suggest
Royal London is pursuing a takeover of LV= in a deal that would create a "mutual champion" with nearly 10 million customers across the UK, according to Sky News - a report LV= addressed on Monday morning.
Sky News city editor Mark Kleinman said he understands LV='s board met last week to discuss the progress of a strategic review that began in June. The news outlet reported a decision about a deal with Royal London could potentially be reached within days.
The broadcaster suggested the two parties are not in exclusive discussions, and Bain Capital, the private equity backer of motor insurer esure, is also said to be keen on acquiring LV=.
LV= in a statement on Monday morning said: "The Board of Liverpool Victoria Financial Services Limited ("LV=") notes the recent press speculation and confirms that as part of a previously announced Strategic Review it has been and remains in discussions with a number of parties regarding a potential transaction.
"Discussions are on-going and there can be no certainty that the discussions will result in any transaction being agreed or with whom."
The precise valuation of LV= is unclear, although people close to the firm reportedly told Sky it would be in excess of £500m but "substantially less" than £1bn. Royal London is said to be planning to finance the purchase by using money raised last year.
When approached by COVER sister title Professional Adviser, Royal London and Bain Capital declined to comment.
Roy McLoughlin, co-chair of the Income Protection Task Force (IPTF) and associate director at adviser firm Cavendish Ware said: "There is historical evidence that insurers coming together can help bolster their propositions, so if these rumours are true then there may be a positive here.
"For example, when Aviva took over Friends Life and other providers in 2015, it made them stronger. In as much as we don't want to see the market shrink, if it works to improve the overall offering then I am supportive of that. If it also helps to improve the reach of income protection and bring it to its rightful place at the forefront of protection conversations, then that can only be a good thing."
Alan Knowles, chair of the Protection Distributors Group and managing director of Cura Financial Services added: "It's always sad to see a big brand disappear, much like AXA, Bupa, Friends Life and Scottish Provident. But, sometimes it can sometimes be a positive and if this does happen then hopefully they will bring together the best parts of both offerings so both advisers and customers get the benefits of two great companies in one."