LV= has sold its entire savings, retirement and protection businesses to private equity firm Bain Capital for £530m.

After reports Royal London was interested in an acquisition as well, LV= and Bain entered exclusive sale talks in October, and have now sealed a deal following a “comprehensive and rigorous strategic review”.

In a stock market announcement this morning, LV= says the deal “maintains competition and choice for customers and IFAs in the UK market by supporting LV=’s ambitions to grow its leading brand, distribution and products”.

LV= will ring-fence its with-profits business in a separate fund, but will close it to new business.

The firm says the injection of capital from Bain will allow it to up distributions to with-profits members by as much as 40 per cent as their policies mature.

LV= members and regulators still need to approve Bain’s acquisition, which should complete by the end of next year if successful.

Because LV= will no longer be a mutual once the deal finishes, members will be given  a cash payment to compensate. A special meeting should be called for a vote on the buy-out in the first half of 2021.

LV= chairman Alex Cook says: “As a newly standalone life and pensions business in an increasingly competitive market, the board recognised that LV= required significant long-term investment to be sustainable. This transaction is the culmination of an extremely thorough and robust strategic review – followed by a structured sale process to secure the best long-term future for our members, employees, other stakeholders and the business.”

Bain’s global head of insurance Matt Popoli says LV= has “strong IFA relationships” and a “clearly established product set”.

LV= had already sold off its general insurance business to Allianz at the end of 2019.

The challenge, the board writes this morning, was balancing the need to invest in the savings, retirement and protection business to make sure they stayed healthy, and making sure with-profits holders got enhanced returns.

“It was clear to the board that as a newly standalone life and pensions business – in an increasingly competitive market dominated by global, well-funded, shareholder owned insurers – LV= would require significant long-term investment to be sustainable,” the note to the stockmarket this morning reads.

A price tag of between £500m and £1bn was originally mooted for LV=, with the eventual deal coming in near the lower-end of those expectations.