INSURANCE and savings business LV= has said it is in merger talks with its rival Royal London – after previously warning that such a move would mean redundancies.

A bid to sell LV= to an American private equity firm failed in December after it was approved by 69.4 per cent of members instead of the required 75 per cent.

Royal London had already offered merger talks, but LV= chief executive Mark Hartigan said last year: “They made very clear that the success of their bid relies on synergies and that means redundancies.

“They don’t need the brand and didn’t give us support for the sites.”

Chairman Alan Cook said after December’s vote that he would be standing down.

The County Gates-based mutual organisation said he would be replaced by Samuel Creedon as interim chairman from April 1. 

In an update concerning his appointment, Mr Creedon said: “We share a common interest with Royal London in a healthy and vibrant mutual sector so that we can both compete fairly with shareholder-owned firms.

“We have had, and continue to have, discussions with Royal London about if and how we can co-operate to the benefit of both sets of members and the mutual sector.

“In the meantime, we will continue to strengthen our independent business for the benefit of our existing and future policyholders.”

A Royal London spokeswoman said: “In light of the outcome of LV=’s special general meeting, Royal London issued a statement on December 10 outlining our belief that we could offer an attractive future for the members of LV= as part of a growing and well-capitalised mutual.

“We note LV=’s announcement and we can confirm we have had initial, exploratory discussions with them.

“There is no certainty that these discussions will result in a transaction and a further announcement will be made as and when.”

LV= also announced that David Barral, Alison Hutchinson and Luke Savage would all step down as directors next month.

Royal London initially offered £10million more to buy LV= than the £530m offered by the preferred bidder, Bain Capital. But Mr Hartigan said last autumn that the net value for members would have been "tens of millions" of pounds lower.

He told the Daily Echo last year: "During the process of taking bids, the only entity that made a commitment to our three sites was Bain Capital. The only entity that made a commitment to our brand was Bain Capital. The only entity that wanted an independent future for LV= was Bain Capital.

“Because Royal London are a much larger business, they’ve got their own product suites, they’ve got their own customer centres, they’ve got a very large place up in Winslow. This is business – why would they need to invest in us as a separate business?” he said.