Royal London has offered to enter into “immediate and exclusive discussions” with LV= to agree a mutual merger that would allow LV= members to have their savings invested and protected by a mutual.

Royal London said that it would expect a merger to offer LV= members the option to become members of Royal London, although it clarified that this proposal would be on a different basis than the previous offer in 2020.

If the merger was to proceed, Royal London said members would benefit from a customer-owned alternative to the rest of the insurance and long-term savings market, which the firm noted is almost universally shareholder-owned.

“We are confident that there will be exciting opportunities for colleagues within both Royal London and LV= as part of a larger, well-capitalised and growing mutual,” a Royal London statement said.

“We hope to agree a proposal that Royal London can recommend to our members. If we proceed, we will consult widely and provide clear information to members of both organisations about what this merger might mean for them.”

In the meantime, Royal London emphasised that the discussions will have no impact on day-to-day business, clarifying that there is no certainty that the discussions will result in a transaction.

The news was announced following LV=’s Special General Meeting, where the acquisition of the LV= business by Bain capital was rejected, as the 75 per cent threshold was not met, despite the majority (69 per cent) of voting members voting in favour.

In light of this, LV= has said that it will “swiftly reassess” its strategic options and explore alternative ways to provide the best long-term outcome for members following the vote, confirming that it is also aware of Royal London’s interest.

“We are aware that Royal London has made statements concerning its interest in further discussions which it has said might incorporate membership for some or all of our members and we expect, amongst other things, to explore such a possibility”, a company statement read.

Adding to this, LV= chairman, Alan Cook, said: “The board remains committed to finding a solution to the challenges presented by a declining with-profits membership base.

“As we have said throughout this process, the growth and investment required to remain competitive over the long-term is not a fair or appropriate burden for our with-profits members to bear.

“This investment would delay and potentially impact the level of returns they could expect to see, given a quarter of our members are with-profits policyholders today and we expect over the next 10 years this will reduce to only 10 per cent.

“Therefore, as we move into 2022, I will continue to lead the process to find a way forward that will enable us to provide the right financial outcome for all our members whilst respecting their different wishes."

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