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LV= confirms talks over general insurance unit

May 17, 2017

LV= has confirmed that it has received approaches from several parties regarding possible strategic transactions relating to its general insurance operations.

"Discussions are at a very early stage, no decisions have been made as to the nature of any transaction(s) and there can be no certainty that any transaction will be agreed or with whom," LV= said in an announcement on 16 May.

The move comes as tougher capital requirements and the prolonged low interest rate environment put pressure on insurers’ profitability.

“The board of LV= has previously disclosed its consideration of strategic options with a view to strengthening the group's capital position,” LV= continued.

The statement follows earlier reports that German insurance giant Allianz had approached the mutual insurer regarding a minority stake in its general insurance unit.

Sky News reported that discussions were at an early stage, with one analyst pointing to a deal valuation in excess of £1bn.

In March, the broadcaster also reported that LV= had held abortive talks with fellow mutual Royal London about a possible tie-up.

In 2016, LV=’s general insurance division fell to an £26mn operating loss versus a £72mn profit in the year prior, fuelled by a £139mn reserve charge relating to Ogden rate changes.