Windfall payments for 250,000 as LV= plans demutualisation with sale to US private equity giant Bain

More than 250,000 savers with Liverpool Victoria are in line for big windfalls as the mutually owned insurer is set to be sold to a US private equity giant.

In a deal that brings back memories of the demutualisations of building societies in the 1980s and 1990s which led to windfalls of hundreds or thousands of pounds, US private equity group Bain Capital is in exclusive discussions over a takeover of the group.

That would mean payouts for the company’s 250,000 with-profits policyholders.

All members of the firm would have to vote on any such deal and the mutual, rebranded as LV=, said it was not certain any deal would take place.

Reports last week said Royal London, another mutual, was also considering a merger merge with LV= but today it emerged that talks with Bain are now exclusive.

Sky News had originally reported that Royal London wanted to create a “mutual champion”, creating a combined group with £139 billion under management.

LV= manages £14 billion of assets. It sold its general insurance operations to Allianz of Germany at the end of last year.

Demutualisations triggered windfalls for the members of building societies such as the Halifax and Northern Rock but the process ended disastrously with their share price crashes in the global financial crisis after lending irresponsibly.

LV= put itself up for sale earlier this year and its decision to favour an American private equity firm over another mutual will be controversial among those favouring diversity in the types of financial services companies serving British savers and borrowers.