Pensions group Royal London has proposed a deal that would involve splitting insurer LV= with US private equity firm Bain Capital, according to reports.

The board of LV has already approved the sale of the company to Bain for GBP530mln and LV members are voting on the sale on 10 December. The sale is controversial because of fears LV may lose its mutual status.

The Mail on Sunday reported yesterday that it had seen an email from Royal London chief executive Barry O’Dwyer to LV chief executive Mark Hartigan which proposes a “three-way discussion between Liverpool Victoria, Bain Capital and Royal London” if members vote against the Bain takeover.

It is understood that Royal London, which had a previous offer for LV rejected, is interested in buying only LV’s old with-profits policies and other existing business such as annuities, the Mail on Sunday said.

Bain Capital would take on the LV brand as a separate business aimed at attracting new customers.

Royal London insiders admitted that LV members would likely lose their mutual rights under its alternative proposal, the Mail on Sunday said.

Bain told the newspapert that it plans to almost double the number of policyholders and also pledged not to increase LV’s GBP350mln debt.

Matt Popoli, head of insurance at Bain Capital, told the Mail on Sunday: “”We have an ambition to restore LV to its position as a top three life insurance provider across a wide range of products. Our proposal is strengthening LV’s financial position.

“Not only are we providing access to investment capital for growth, we will not be increasing LV’s debt.”

Royal London said in a statement it had been in contact with LV and “asked them to consider if their current proposal to members could be enhanced”, the Guardian reported.

“We are ready to explore any option that delivers a better member outcome, including options that would allow LV= members to become members of Royal London. The board of LV= has not taken up our offer to discuss other possible options but our door is open and we remain ready to engage,” the statement said.

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