Demutualisation also affects the wider marketplace. In products where there is a strong mutual presence, there is often greater innovation and more effective competition.
A recent EU report indicated that in 2018 4 per cent of turnover in PLCs was redirected to meeting shareholder interests: in mutuals that money is either retained in the business to improve customer outcomes, or shared with the local community for the wider good.
Returning to LV=, it is not necessarily the case that the organisation will re-align its interests purely with those of its private equity owners. But we await with interest what it plans to do with the new capital it says it needs (it was already sitting on £1bn from the sale of its general insurance business).
And we wait to see what influence Bain Capital exerts, which according to one US commentator, is "notorious for its failure to plow profits back into its businesses".
As a trade body that promotes the merits of member ownership, you might forgive the Association of Financial Mutuals for being wary of the sale of a mutual that, in the 1990s, was so proud of its mutual ownership that its management introduced rules to resist any attempt to demutualise.
Today’s managers have found a way to avoid that ‘mutual lock’- though any sale will only go ahead if 75 per cent of members voting agree.
We have to hope that when the members have their chance to vote, they have a clear indication of how life will change under private equity - which means that, for now at least, democracy remains alive and kicking in LV=.
Martin Shaw is chief executive of Association of Financial Mutuals
