If Bain buys LV, it will get a company with about 1.3m customers who have a variety of life insurance and pensions products © Getty Images

Life insurer LV is in exclusive takeover talks with private equity firm Bain Capital over a deal that could value the company at more than £500m and provide a windfall payout for LV’s 1.1m members.

LV is one of the UK’s largest and oldest mutually-owned life insurance companies, having been founded in 1843. After selling its general insurance business, which provides cover for cars and homes, to Germany’s Allianz last year, it launched a strategic review in June under new chief executive Mark Hartigan.

In a statement on Friday, the company said that “discussions between LV= and Bain Capital are ongoing and there can be no certainty that any transaction will be agreed, nor any certainty as to the terms on which any such transaction might proceed”.

It said that its focus was on “maximising long-term value for its members and ensuring the business continues to be operated in their best interests”.

LV had been in talks with other companies, including rival Royal London, but narrowed the field down to one.

Bain Capital declined to comment.

US-based Bain, which manages about $105bn, is not a newcomer to UK insurance. Two years ago it took motor insurer esure private in a £1.2bn deal that came five years after the company had floated on the stock market. Its other investments include clothing brand Canada Goose and Kantar, the market research group.

If it buys LV, it would get a company with about 1.3m customers who have a variety of life insurance and pensions products, some of which last for many years.

Private equity firms are taking a growing interest in life insurance around the world. While the industry is capital-intensive and heavily regulated it offers the potential for decent returns.

In the UK, private equity money has backed PIC and Rothesay Life, both of which are active in the pensions market. And Oaktree Capital has funded Utmost, which this year bought the remnants of scandal-hit Equitable Life.

US-based private equity firm Apollo has been particularly active, backing Athene in the US and Athora in Europe to buy up life insurance companies. This year Athene bought a $500m stake in Jackson, which is Prudential’s US business.

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