LV chief on the ropes: Insurance boss is accused of ‘pulling wool over eyes’ of members in takeover push
- Chief executive of LV accused of trying to ‘hoodwink’ members into selling to private equity sharks
- Mark Hartigan took to airwaves to talk up £530million offer from Bain Capital
- Critics said he failed to fully address rival bids, job security, and how he stands to benefit if Bain takes over
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.
Amid a furious backlash against the deal, Mark Hartigan (pictured) took to the airwaves in an attempt to talk up the £530million offer from US firm Bain Capital
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.
Tory MP Kevin Hollinrake (pictured), 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’
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.
Life’s Very good when you’ve got 3 homes in one
By Tom Witherow and Kumail Jaffer for the Daily Mail
The millionaire supremo behind the bid to sell LV to American vulture capitalists lives in a £1.5million historic Cotswolds mansion made up of three houses knocked into one.
Mark Hartigan’s grand country home near Bath in Somerset was built early in the reign of Queen Victoria. The father-of-three’s house lies behind black cast-iron gates with stone walls draped in wisteria and has a private gravel driveway leading to a two-car garage and a tennis court.
His quaint village, hidden down tight country lanes, lies just within the boundaries of the Cotswolds and has a Grade I-listed church dating to the 12th century. The family’s social media accounts reveal how the career of Mr Hartigan, 58, has given them the trappings of wealth.
They have been abroad on holidays to exotic locations such as Hong Kong where they went to Disneyland.
The millionaire supremo behind the bid to sell LV to American vulture capitalists lives in a £1.5million historic Cotswolds mansion made up of three houses knocked into one
The boss’s eldest son, 23, attended £35,000-a-year Downside School before Oxford Brookes University. He was an intern at Zurich Insurance’s United Arab Emirates office while his father was an executive there and is a regular on the ski slopes. Mr Hartigan’s daughter, 19, also went to Downside and is now a student at Edinburgh University.
The family’s gilded lifestyle is likely to be boosted if LV’s board succeeds in selling the company to Bain Capital. Mr Hartigan may get a major improvement to his salary. He could also be handed a chunk of the new private company.
Angry members of LV, who currently own it as a mutual, have accused the boss of being ‘extremely disingenuous’ over his future pay after he claimed he would not benefit from the deal at all.
Yesterday Mr Hartigan doubled down, telling the BBC: ‘There’s no incentives related to the deal for me or anyone else, the chairman, the board or any part of our management team.’
However, it is thought that chairman Alan Cook, 68, who lives in a £1million house near Milton Keynes, Buckinghamshire, can expect to remain in post for an extra two years, netting another £410,000 in fees.
Cold hard truths behind his oh-so cheery salesman’s pitch
CLAIM: ‘It’s the only deal that saves LV… it’s the best financial outcome for all of our members.’
Reality: When LV put itself up for sale, the business received 12 offers. The £530million bid from Bain Capital will give members just £100 each to give up their ownership of LV. A rival bid from fellow mutual Royal London was rumoured to be £10million more than the US firm’s offer. In addition, Bain will run the business for profit – meaning costs such as exit fees could jump, as well as prices for customer policies.
CLAIM: ‘[Bain] is the only business that is prepared to invest in our growth. And that means saving the jobs that we have and the sites that we operate in.’
Reality: Bain has given no commitment on LV’s 1,500 jobs. All it has said is that it will maintain a presence in LV’s three sites in Bournemouth, Exeter and Hitchin in Hertfordshire. Yet even this promise is not legally binding. Senior industry sources have said it is hard to imagine LV retaining more employees under Bain, a profit-hungry private equity outfit, than if a fellow mutual such as Royal London took over. It is also understood that, under Mr Hartigan’s future business plans, LV is set to axe many jobs as the firm invests in new technology. Furthermore, sources close to the bidding process say LV never asked potential buyers to make commitments on jobs.
CLAIM: ‘There’s no incentives related to the deal for me or anyone else, the chairman, the board or any part of our management team.’
Reality: While Mr Hartigan and LV’s £205,000-a-year chairman, Alan Cook, will not make any money directly from the deal, they will keep their jobs. Under the Bain proposals, Mr Cook will stay on for at least another two years. While Mr Hartigan has not yet signed a contract with Bain, it is understood he is likely to be retained with a significant pay rise. He received £1.2million from LV last year. It is understood that Bain would also hand him an ownership stake in the company, which could be worth millions.
CLAIM: ‘It’s an excellent outcome, after many, many months of hard work to get [the takeover deal] clear and get it right under the full gaze of the regulators and all of the experts.’
Reality: Mr Hartigan seems to suggest that two key watchdogs – the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority – back Bain’s bid above all others. However, this was the only offer for LV they were ever shown – and so they could not possibly judge whether it was the best available.
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