Merger talks between the mutual insurer LV= and Royal London have broken down. It is the second time within two months that a deal to buy the 178-year-old firm, originally known as Liverpool Victoria, has collapsed. LV=’s members blocked a planned takeover by the US private equity firm Bain Capital in December, when they rejected the year-long campaign by the company’s board to secure backing for its preferred bidder. LV= began discussions with its fellow mutual Royal London at the start of the year. However, the company said in a statement to the London Stock Exchange that it had “become clear to LV= that our different mutual models mean such a merger would not be in the best interests of LV= members”. Seamus Creedon, LV=’s interim chair, said: “The strength of LV=’s business performance over the past 18 months combined with its operational progress has strengthened the board’s belief in, and commitment to, the continuation of our status as an independent mutual.” Creedon said LV= had heard what its members had said “about the importance of mutuality and the continuation of the LV= brand”. The company said it had a strong capital position, was trading well and would update its members on its business strategy “shortly”. LV=’s announcement that talks had ended came just days after a boardroom clearout, after the failure of the mutual’s management to gain member approval for the controversial sale of the company to Bain Capital for £530m. Members rejected the deal, which would have ended LV=’s member-owned status. The company said on Monday its chairman Alan Cook – who had come in for heavy criticism over the demutualisation plan – would step down, replaced on an interim basis by Creedon, a non-executive director at the firm. Three other directors will also leave, although LV=’s chief executive Mark Hartigan remains in place. Royal London had had its sights on a tie-up with LV= for some time, after LV=’s management chose to proceed with talks with Bain instead, and even proposed an “early three-way discussion” between Royal London, Bain and LV=, if it looked like LV= members would reject the Bain deal. In the event, Royal London waited in the wings while the LV= and Bain drama played out. It put forward an unsolicited offer for LV= in December, which was rejected, but then entered talks with its fellow mutual in the new year. Barry O’Dwyer, the group chief executive of Royal London, said: “Our offer to preserve LV=’s mutuality through a merger with Royal London was based on an understanding that LV= did not have a viable future as an independent company. For Royal London’s customers and members, nothing changes.” Royal London said it planned to share “a substantial level of profits” with its eligible customers in April, as usual.