Demutualisation and how to stop it

Demutualisation has ripped through many countries’ mutual sectors, as people have sought to cash in on many decades, even centuries, of legacy assets that were built up by generations of members. Yet it has not happened everywhere and there are lessons we can learn from those countries with large co-operative and mutual sectors.

In this new publication Mutuo’s Peter Hunt examines the history and impact of demutualisation, the stated reasons given for it, and explores in detail last year’s failed attempt to demutualise the UK’s second largest mutual insurer, LV=. The document concludes with a toolkit which sets out clearly how demutualisation can be stopped by a mixture of member action, media spotlight and political support.

View the document

A victory for mutuality as members reject the private equity raid

The decision by LV= members to reject the proposed sale to Bain Capital is a major boost for mutuals everywhere.

Members voted to support their customer-focussed business purpose, and reject a transfer to profit-maximising private equity owners.

It’s a vote of confidence in mutual, equitable, business, and sends a warning to potential corporate raiders that mutual members will not submit meekly to their advances.

Mutuo is delighted at this outcome, having campaigned against the proposal for the whole of 2021. Its decision in January to propose an inquiry by the APPG for Mutuals into the demutualisation, ensured that proper scrutiny was assured.

Led by its Chair Gareth Thomas MP, the Group exposed the weakness of the case put forward by the Board of LV=, which would have seen the 178 year old mutual asset stripped by private equity.

The persistent campaigning by Daily Mail business journalists Archie Mitchell and Lucy White was supported by media from across the spectrum. The only comments in favour of the deal came from people bought and paid for by management, using members’ money, of course. Otherwise, the criticism was unanimous. It was a rotten deal.

This whole affair has exposed the weakness of the legal and regulatory framework governing mutuals. Government, which has sat on the fence throughout this affair, must now act.

  • Mutuals need to be able to raise investment capital without demutualising. Treasury should fully enact existing legislation without delay.
  • The process of regulating demutualisation proposals also needs to be overhauled, so that members’ interests can be fully respected.
  • Incentives to demutualise also need to be removed. As long as there are unprotected legacy assets, there will be people determined to loot them who did not invest or contribute to them in any way. The law must step in now to ensure that they are preserved for the purpose they were intended.

Mutuo will now pursue this reform agenda with vigour. If you agree with us, come and help.

APPG Chair, Gareth Thomas MP, secures Commons adjournment debate on the future of LV=

Gareth Thomas MP, chair of the APPG for Mutuals, spoke in Parliament yesterday evening about the demutualisation of LV=.

He argued that in the case of LV=, there has never been “a clear, easy to understand, reason why demutualisation is needed. The business is well capitalised; indeed, it recently sold its general insurance business for over a billion pounds. It has raised significant sums on the capital markets. Both the chairman and chief executive argued the business was in very good financial shape up until their plans for putting Liverpool Victoria up for sale were leaked to the media…”

Mr Thomas also used the debate to emphasize how LV= members have been excluded from the process so far. He stressed that members have a right to know precisely why this sale to Bain Capital is happening, especially as the private equity firm has no experience in running a financial mutual.

Mr Thomas went on to mention how the conversion from a friendly society to a company limited by guarantee, and the decision to demutualise are intimately linked and should be understood as so by regulators. He remarked how “the failure to consider interlinked business decisions was a “fundamental failure identified by Dame Elizabeth Gloucester in her devastating report into the LC&F debacle.” The failure of regulators to see how these two events are connected “appears to be a clear repeat of that mistake.”

The APPG for Mutuals will continue working to ensure that LV= members are consulted on what is happening, and that corporate diversity is championed.

The debate can be read in full on Hansard.

APPG for Mutuals new report: Inquiry into the planned demutualisation of LV=

The All-Party Parliamentary Group for Mutuals [APPG] has today released a new report into the planned demutualisation of LV=.

LV=, one of Britain’s biggest financial mutuals, founded in 1843 and trading for most of its life as Liverpool Victoria, is well known across the UK.

In December 2020 LV= announced that it had reached an agreement on the terms of a sale to Bain Capital, a leading U.S. private investment firm specialising in Private Equity.

The APPG, which has over one hundred members from both Houses of Parliament, found that:

  1. It is very difficult for an individual member of LV= to be able to assess whether the demutualisation proposal is in their interests or not.
  2. On the basis of the evidence available to us, the Group concluded that the Leadership at LV= has not been open and transparent with the members about its intentions for the company.
  3. The fact that the board will move ahead to conclude a deal with Bain Capital in advance of providing any meaningful information to its membership shows a disregard for the interest of members and a cavalier attitude towards the member governance of this business.
  4. The planned demutualisation damages the diversity of financial services providers in the UK and weakens the mutual sector unnecessarily.
  5. Regulatory authorities do not appear to have so far acted fully in the interests of members, consumers and the wider economy.

APPG Chair, Gareth Thomas MP, said “What’s clear from the Group’s findings is that this demutualisation, like those before it, appears to be wholly unnecessary. We know from past experience that demutualisation is bad for members, customers and for the economy more widely. LV=’s planned sale to Bain Capital appears to be following the same pattern. The report finds that LV= has been unclear in its communication to members about its commitment to mutuality, the future business plan and the need for capital. At the very least LV= should now engage directly with members to explain the rationale for demutualising.”

View the report

Mutuo provides secretariat to the APPG for Mutuals. Find out more here.

Measuring the Value of Mutuality

As values-based businesses, co-operatives and mutuals need to be able to describe and quantify the benefits that their mutual business structure brings to customers, stakeholders and the wider society.

The Australian Business Council of Co-operatives and Mutuals (BCCM) has worked with Monash University to develop a new way of measuring this positive impact – the Mutual Value Measurement (MVM).

Mutuo Mutual Value Measurement

Mutuo develops new Mutual Value Measurement Consultancy package

As the first authorised implementer of MVM, Mutuo has now developed a new consultancy package to help co-operative and mutual businesses to apply the six dimensions of mutual value to their business:

  1. Commerciality
  2. Member relationships
  3. Shaping markets
  4. Community relationships
  5. Ecosystem and reciprocity
  6. Mutual mindset

Our consultancy service is designed through a 4-step package that helps co-operatives and mutuals to understand the tool and to apply it within firms:

  • Step 1 – Baseline review of business
  • Step 2 – Online Workshop with key leaders
  • Step 3 – We produce a Mutual Value Report Statement
  • Step 4 – Consider feedback and finalise statement

In the current social distancing environment, this consultancy is delivered via video conferencing and online methods.

Find out more about MVM and the consultancy package:

View PDF brochure

While this package has been developed with Australian businesses, MVM works for any co-operative or mutual, wherever you might be based.

Contact us today to find out more.

New report recognises the leadership and resilience of Australian co-ops and mutuals

The Business Council for Co-operatives and Mutuals has released a landmark new report, Leading the Resilience: Co-operatives and mutuals through COVID-19.

View the report

This report, authored and researched by Mutuo, highlights important differences between the response of Australian mutuals to crises when compared to investor-owned businesses. 

Mutuo’s Peter Hunt said:

“This research demonstrates clearly how co-ops and mutuals operated through the challenges of COVID-19. We spoke with CEOs from across the sector and were struck by their common focus on continuing employment for their staff and providing real support and guidance for their members.”

The report also finds that Australian co-ops and mutuals are 25 per cent longer lived than their ASX listed counterparts.

In response to COVID-19, co-operatives and mutuals have:

  • bailed in, rather than being bailed out, investing from their balance sheet to aid the recovery
  • been job keepers, moving strategically from the outset to retain employees through redeployment, rather than implementing mass lay-offs
  • implemented mental health strategies for members, customers and staff

Watch a video preview of the report from author Peter Hunt.

First offer of Mutuo-inspired capital instrument in Australia

We are delighted to see the first offer of Mutual Capital Instruments in Australia.

Australian Unity has published an offer of $100 million of Mutual Capital Instruments to help fund the growth of its business. It is the first Australian mutual to take advantage of new legislation passed in April 2019 which created this new type of mutual share.

Mutuo was instrumental in the design and implementation of the project which brought about the new share:

  • Conceived of the project
  • Entered into a partnership with the Business Council of Co-operatives and Mutuals
  • Formed a project team of leading Australian co-operative and mutual businesses to drive the initiative forward
  • Worked with lawyers and funding experts to design the new mutual capital instrument
  • Negotiated with Federal Treasury officials and ministers
  • Helped to build bipartisan support for the new legislation
  • Assisted Parliamentarians in its passage through the Federal Parliament

Commenting on the news, Peter Hunt, Managing Partner of Mutuo said,

Peter Hunt from Mutuo

“Today is the culmination of four years’ work and just shows what can be achieved by co-operative and mutual businesses working together with their peak body to deliver a real change in legislation. The new mutual capital instruments draw upon the best experience of co-operative and mutual fundraising from across the world.

The new capital will facilitate growth and innovation in the best Australian co-operatives and mutuals, supporting the continued success of the sector. Mutuo’s mission is to improve the business environment for co-operatives and mutuals and we are delighted at this development. We wish Australian Unity all the best in their pioneering effort.”

For more information, contact Peter Hunt.

Co-operative Farming: Blueprint for future proofing Aussie farmers

Throughout 2020 Mutuo worked on a new project for the Australian Business Council of Co-operatives and Mutuals designed to support farmers, fishers and foresters through the formation of new farming co-operatives and to foster the resilience and growth of established farming co-operatives.

The project saw a series of roundtables with Australian agricultural co-operative leaders examining some of the sectors key challenges as well as opportunities for future growth.

In September 2020, working closely with these agricultural leaders, Mutuo produced a Blueprint for future proofing Aussie farmers which identified why co-ops are good for Australian farmers, Australia’s regions and Australia as a whole.

View the PDF

A plan for economic growth through co-operatives

In August 2020 Mutuo worked with the Business Council of Co-operatives and Mutuals (BCCM) to produce their Pre-Budget submission to the Australian Federal Government.

Recovery Through Co-operation is a plan for jobs, growth and manufacturing, which would be delivered through a number of regional co-operative development clusters. The two identified growth zones would be built around already successful major co-operatives in Northern New South Wales and Western Australia.

The program consists of a plan to facilitate inter business collaboration on supply chains and exports, by accelerating business opportunities and mobilising investment capital into Australia’s regions.

View the PDF

New report: Who Owns Europe? … and why it matters for Progressives

Who Owns Europe
Who Owns Europe? ... and why it matters for Progressives

Ownership matters. Owners of businesses set the strategic direction, purpose and the terms of employment. Owners of land decide what should be done with it and who can access it. Owners of property decide how it is deployed and who can enjoy its benefits.

But increasingly, ownership is being concentrated in fewer hands, shifting ever more from shared ownership towards private corporations and individuals.

Government policy across the EU takes little or no account of the shifting nature of ownership. It is time to make sure that ownership works in the maximum public interest, serving citizens, customers and employees alike.

Who Owns Europe?, a new report from FEPS/Mutuo launched today, examines ownership across the European Union. It considers how Europe’s businesses are owned and where the benefits of business flow. It looks closely at different types of corporate ownership and the effect they have on fairness and equity.

View the report in full

The report makes a series of recommendations aimed at ensuring strong economies which benefit the wider public good and recommends that progressives should promote policies that:

  • Encourage corporate diversity to ensure that businesses for public benefit are recognised in national constitutions or other supreme law
  • Ensure that the remit of government business and enterprise departments includes all types of business, including mutually owned and public purpose enterprise
  • Ensure that in all legislation, the role of and impact on different types of business forms are considered, rather than simply assuming one approach
  • Seek to ensure in particular, that co-operative and other fields of organisational law merit equivalent attention
  • Promote the appointment to ministerial and official posts, champions to represent different types of business
  • Explore incentives for encouraging those setting up new businesses to choose a public benefit business

The report concludes that we can only prevent Europe being taken over by an idea – that of the pursuit of private gain – if we move away from an economy dominated by business for private profit to one for public benefit.

Learn more about FEPS

Protecting Lives and Livelihoods: ICMIF Global Manifesto 2015 launched

ICMIF Global Manifesto

Mutuo and ICMIF have today published the ICMIF Global Manifesto.

Launched at the biennial ICMIF Conference in Minneapolis the document contains radical proposals calling upon global, regional and national institutions to play their part in:

* Ensuring an appropriate business environment for cooperative and mutual insurance
* Engaging with cooperative and mutual insurers to help to protect lives and livelihoods

View the document

For more information please visit

New Act of Parliament paves way for mutuals to raise capital


We are delighted to announce that the Mutuals’ Deferred Shares Bill today completed its final stage in the House of Commons and will now receive Royal Assent. This is the culmination of two and a half years work of researching, drafting, negotiating and finally legislating for this landmark new law for mutual insurers and friendly societies.

Read more New Act of Parliament paves way for mutuals to raise capital

Mutuals’ Redeemable and Deferred Shares Bill achieves Second Reading in Lords


The Mutuals’ Redeemable and Deferred Shares Bill has achieved its Second Reading in the House of Lords. The Bill, brought forward by Lord Naseby, will now proceed to Committee Stage and Third Reading in the Lords before making its way to  the House of Commons.

Read more Mutuals’ Redeemable and Deferred Shares Bill achieves Second Reading in Lords