Royal Liver and Liverpool Victoria in talks to create a £10bn mutual fund giant

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It has been revealed that the mutual insurers Liverpool Victoria and Royal Liver have been in talks for some weeks over a potential merger deal. Should the two friendly societies join forces, it would create a group worth £10 billion with a combined customer base of over 5 million.

Liverpool Victoria – now branded LV= - is the UK’s largest friendly society, and is now a major player in the car insurance, retirement and policy markets. It has benefited from strong sales and acquisitions which have led to massive growth in their life insurance new business income. It now has around 3.2 million members and customers and in March this year announced they had more than doubled their annual profits.

Royal Liver specialises in life insurance, income protection policies and investment bonds and has experienced significant difficulties throughout the current financial crisis. It posted an operating deficit of £90,000 for the six months to June 30, forcing Royal Liver into a strategic review which has since prompted the merger talks.

Any merger would in fact effectively be a takeover of Royal Liver by LV= and no windfalls would be payable to members of either business. These talks come not long after the Financial Services Authority ordered all mutual insurers to carry out an urgent review of their businesses amid concerns about their long-term viability.

The main obstacle to this merger is Royal Liver’s 200 delegates who are elected by policyholders to represent their interests. They can veto any deal and could use this if they believed LV= would axe jobs.

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