LV= has previously rebuffed Royal London's approaches.

While the Bain bid was on the table, LV= rejected the initial Royal London approach saying Royal London’s proposal would have resulted in the "rationalisation" of operations and significant headcount reductions, with no commitment to retain LV='s office locations in Exeter and Hitchin. 

But with the Bain Capital deal failing to achieve enough support from LV= members the door has now opened to Royal London to try again.

Royal London was believed to initially be one of 12 potential bidders for LV= which says it needs new investment to strengthen its balance sheet and fund growth.

In a statement today Royal London said: “We are delighted to announce that we have offered to enter into exclusive discussions with LV= on a mutual merger that will offer LV= customers the opportunity to have their life savings protected and invested by a mutual.

“We envisage that the terms of the merger would offer LV= members the option to become members of Royal London. 

“If the merger goes ahead, the bringing together of the best of both companies will result in a growing, well-capitalised, modern mutual.  It will provide a great, customer-owned alternative to the rest of the insurance and long-term savings market, which is almost universally shareholder-owned.”

Any merger is likely to require all voting members of both mutuals to approve the deal.

Royal London says it will circulate further information to members about a potential deal if discussions at board level between the two companies are fruitful. Royal London plans to run roadshows and a consultation exercise to present its plans.

The acquisition by Bain Capital, recommended by the LV= board, collapsed last week after failing to get enough support from LV= members in a crucial. Bain needed to win 75% of voting members to seal the deal but only achieved 69%. The vote sent LV= back to the drawing board.

Critics had argued that the Bain Capital takeover was not in the best interests of LV= and redundancies were possible. 

LV chairman Alan Cook announced he would be quitting after the vote failed to go through.