EAGLE Star is to double its size in the Irish general insurance market with its £30 million acquisition of Irish National Insurance from New Ireland Holdings.
The acquisition will give Eagle Star just over 10 per cent of the general insurance market. It will become the fifth largest company with premium income of over £140 million and 438 employees. Eagle Star's plans to acquire Irish National were first disclosed in The Irish Times last Saturday.
The takeover will lead to job losses. Eagle Star's managing director, Mr Ian Stuart, said it was too early to say how many jobs will go. Irish National has 207 employees, seven branches and a headquarters in Dublin. Eagle Star has 231 employees seven branches in exactly the same towns as Irish National and a Dublin headquarters.
"It will take two months plus to plan the details but I am happy that most of the Jobs' fallout can be achieved on a voluntary basis. Eagle Star had a voluntary redundancy programme last year offering 5 1/2 weeks pay per year of service inclusive of statutory entitlements. Twenty five redundancies were sought and the offer was over subscribed.
In addition to savings on staff costs, there will be savings on information technology - both companies have the same computer systems - office space, with the closure of seven branches and one headquarters building and other standing charges.
Mr Stuart said the two businesses were an "exceptionally good fit". Eagle Star is very strong in the personal lines and liability areas, selling mainly motor and household insurance to private customers, while Irish National's strength is in property and commercial underwriting - liability fire and burglary insurance for commercial clients. "The two together will give us a better balanced book," he said.
Irish National, ultimately 83 per cent owned by the French company Union Assurances de Paris through Sun Life and Provincial Holdings, has about 4 per cent of the general insurance market, while Eagle Star has a 6 per cent share. Eagle Star is a subsidiary of Eagle Star Holdings in the UK which is part of British American Financial Service which in turn is owned by the publicly quoted BAT Industries.
Eagle Star is funding the acquisition out of "resources accumulated from profitable trading in the Irish market". A spokesman at the group UK headquarters said "this is an Irish deal, not a British company taking over an Irish one".
But he added that the group is very happy with its performance in the Irish market and is interested in further expansion in both the general and the life businesses. Eagle Star also has a life operation in Ireland which is the sixth largest company in the market, according to 1995 industry figures.
Irish National has not yet reported results for 1996, but the £30 million price represents a premium of £5.4 million on its end December 1995 net assets of £24.6 million. Irish National is to pay a £2.75 million dividend to its New Ireland parent before the sale. When the dividend is included, the sales price is about 1.3 times net assets.
New Ireland managing director Mr Jack Casey said his company took a strategic decision to sell Irish National because the operation was small in an intensively competitive market where rationalisation was expected. "Irish National is far better off with Eagle Star. They can become a serious player and we got a fair price," he said.
But he stressed that UAP is "fully committed" to building its New Ireland life and pensions and funds management businesses. "We are number two in this market and there is no question of any diminution on that strategy," he insisted.
The parties have been in discussions since early January. The acquisition is subject to the approval of New Ireland shareholders and the Irish regulatory authorities.
