O’Roarke: Co-op GI price tag too high for LV=

LV= will not be making a bid for The Co-operative Banking Group’s up-for-sale general insurance business because the price is too high, according to LV= general insurance managing director John O’Roarke said.

However, buyers may be interested in The Co-op GI’s renewal rights, he suggested.

The Co-op is believed to be seeking up to £650m for its GI business, but the unit’s net asset value at the end of 2012 was only £276.1m.

Speaking to Insurance Times at Biba 2013, O’Roarke said The Co-op’s GI business is “too big in terms of the price tag that has been mentioned. It wouldn’t be an acquisition we’d take seriously.”

However, he added: “If there was a renewal rights deal a few in the market might be interested, but a pure equity acquisition wouldn’t be on the cards for us.”

LV= is interested in bulking up its commercial SME business. O’Roarke said his company is growing the book organically, but added: “If there were small, bolt-on SME opportunities, those would be helpful.”

The company is also expanding its commercial horizons beyond pure SME.

O’Roarke said: “We are going up the premium scale in terms of the size of business we are interested in looking at. We are doing more business in the £10,000 to £50,000 premium area. Three years ago, almost everything we wrote was under £10,000 of premium.”

The LV= group announced this morning that it had raised £350m from a subordinated bond issue.

O’Roarke said that although the proceeds could give additional financial firepower to the GI arm if necessary, the main focus of the issue was to fund growth in the life side of the business.

He said the GI business was self-funding, generating annual net cash flow after tax of £75m.