The mutual insurer LV= has launched a boardroom clear-out following the high-profile failure of its management to sell the company to a US private equity firm last year.
The 197-year old firm, which failed in December to win enough support from its members for a plan to sell itself to Bain Capital, said its chairman would step down from the start of April, while three other directors would also leave.
Alan Cook, who had faced heavy criticism over the demutualisation plan, will be replaced by Seamus Creedon on an interim basis. He is a non-executive director at the firm and will lead the process to reshape the board.
The company confirmed that talks with its fellow mutual insurer Royal London had been reopened following the failure of the Bain Capital deal, reigniting a process that supporters of keeping LV= in mutual ownership said could have offered a better solution than selling to a private equity firm.
LV= said three other non-executives would also leave as it reshapes the board, including David Barral, who will depart after reaching the end of his six-year term on 7 March, while Alison Hutchinson and Luke Savage will also step down. Hutchinson had faced criticism for sitting on the board of the member-owned Yorkshire Building Society at the same time as backing the demutualisation of LV=.
However, LV= said its chief executive, Mark Hartigan, who had faced stiff criticism over the Bain Capital plan, would remain with the company. Creedon said Hartigan had been doing an excellent job of running the insurer. “The board takes full responsibility for the unsuccessful transaction, which Mark actively advocated on its behalf, and my colleagues and I have high confidence in him and his team,” he said.
Creedon said the firm had common interests with Royal London in promoting a healthy and vibrant mutual sector. “We felt it right to take time to understand the message members gave the board. Put simply, our members told us that what they viewed as the modest financial advantages of the transaction were not worth the loss of ownership and voting rights for our million-plus members,” he added.
Gareth Thomas, the Labour and Co-operative MP who chairs the all party parliamentary group for mutuals, said he hoped LV= would now be more open with its members about the risks and benefits in their talks with Royal London.
He said: “After LV=’s dismal and thankfully unsuccessful attempt to demutualise and sell up to the controversial US private equity giant Bain Capital, it’s good to see the board have heard their members’ message and are now committed to a mutual future.”
