Insurance boss is accused of 'pulling wool over eyes' of members in takeover ...

The chief executive of LV was yesterday accused of trying to ‘hoodwink’ the insurer’s members into selling out to private equity sharks.

Amid a furious backlash against the deal, Mark Hartigan took to the airwaves in an attempt to talk up the £530million offer from US firm Bain Capital.

But critics said the former army colonel was ‘dancing on the head of a pin’ as he failed to fully address rival bids, job security, and how he stands to benefit if Bain takes over. 

Asked on BBC Radio 4’s Today programme whether he would keep his job under new owners, Mr Hartigan, who was paid £1.2million last year, avoided the question. 

He said he would make no money from the Bain deal itself – but LV’s chairman Alan Cook told MPs just last month that ‘undoubtedly, there will be some form of long term incentive’ for him if Bain buys the 178-year-old mutual. 

LV’s 1.2million members stand to gain as little as £100 each from the deal.

Mr Hartigan also refused to guarantee that all 1,500 staff would be safe under Bain. The Mail understands that if he stays on, cuts are on the cards as LV invests in new technology.

The chief executive repeated his claim that Bain’s offer gave the ‘best financial outcome’ for members – despite refusing to disclose any details of rival bids. Mr Cook and Mr Hartigan’s motives for backing Bain have been called into question as other offers would likely have seen both businessmen lose their jobs.

Tory MP Kevin Hollinrake, chairman of the All Party Parliamentary Group on Fair Business Banking, said: ‘It all sounds increasingly desperate. [Mr Hartigan] is dancing on the head of a pin.’ Labour MP Gareth Thomas, chairman of the APPG on Mutuals, added that LV’s bosses are ‘trying to pull the wool over people’s eyes’.

LV, formerly known as Liverpool Victoria, was founded to help the poor of Liverpool bury their dead. Since then, it has been owned by its members as a mutual, meaning it is run with their benefit in mind and not for profit.

By contrast, private equity firms are notorious for using brutal tactics such as asset-stripping and job cuts before selling their targets on at a profit. Yet LV also received an offer from another mutual, Royal London, when bosses decided last year that they needed to sell the business to fund future expansion.

When asked about rumours that Royal London offered £10million more for LV than Bain, Mr Hartigan dodged that question too. He said: ‘Let me be clear, the very best financial outcome was provided by Bain Capital.’

Mr Thomas said: ‘Instead of trying to hoodwink members into voting for a deal that may not be in their best interests, [Mr] Hartigan should immediately publish the deal which Royal London offered and the one which Bain offered. Then members can make up their own minds about which looks better.’

Mr Hartigan also claimed Bain was ‘the only business that is prepared to invest in our growth... and that means saving the jobs that we have’. Yet when asked specifically whether the private equity firm had made commitments to LV’s 1,500 workers based in Bournemouth, Exeter and Hitchin in Hertfordshire, Mr Hartigan said: ‘It’s not about Bain telling me anything, it’s about Bain investing in us.’

Industry sources have questioned how Bain will be able to make any money from LV without drastically slimming down the business.

Labour peer Margaret Hodge said: ‘To give what must be false promises, particularly when there are thought to be plans in place to cut staff, is not just misleading but is a failing by LV bosses to carry out their obligations to employees in an honest way.’ LV members who own policies such as life insurance, pensions or annuities can vote on the Bain takeover by post until December 8, or at an online meeting on December 10. Customers with other LV-branded policies, such as home or car insurance, cannot vote as this arm of LV has already been sold to Allianz.   

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