The hundreds of Irish Life staff who took part in a series of races the group sponsors in Dublin over the summer have dwindled to a hardy bunch of about 50 prepared to tackle the Dublin City Marathon, which returns next weekend after a two-year pandemic hiatus.
Declan Bolger, the fit-looking 47-year-old chief executive of Irish Life, isn’t among them.
“My wife is doing it, though,” the Wexford native says of the race that Irish Life has agreed to back for three years, after the previous patron, KBC Bank Ireland, put itself into wind-down mode. “I do run, but this year I’m really focusing on cycling. At some stage over the three years I’ll do it.”
As the largest life and pensions group and third-largest health insurer in the State, Irish Life is all about the long game — even as current gyrations in global stock and bond markets rattle investors with a short-term view.
With 1.5 million customers, the 83-year-old group has a relationship with almost one in three people in Ireland, three in five workers in the State, and 27 of the top 30 overseas multinationals with operations in the Republic, according to Bolger.
In the nine years since Canada’s Great-West Lifeco bought the business from the State and merged it with its Canada Life Ireland, the wider Irish group has grown its customer base by 50 per cent — helped by acquisitions — and expanded its workforce by a net 20 per cent to about 3,000.
Assets under management at Irish Life Investment Managers (ILIM) have jumped from €37 billion to over €100 billion over the same period.
The lifer career of Bolger, who tested his physical endurance last weekend by tackling a few Pyrenees mountains on the Tour de France route with some friends, is also a rare feat of longevity for someone of his generation in today’s revolving doors-corporate world.
Backpacking through Asia
On leaving St Peter’s College in his native Wexford in 1992, Bolger joined Bank of Ireland Lifetime (now Bank of Ireland Life) to train as an actuary. After securing an initial qualification, he took a year-long break with friends who were finishing college at the time to travel to Australia and backpack through parts of Asia.
‘I came back to Ireland and joined Canada Life with a plan to save money to go to South America. But I’m still here’
“I came back to Ireland and joined Canada Life with a plan to save money to go to South America,” he says. “But I’m still here.”
Having completed his actuarial exams with Canada Life, Bolger found himself on a small team that launched the company into the German market out of Dublin in 2000, selling unit-linked products — where customers’ money is pooled together and invested — through the country’s developing independent broker market at the time.
After holding a number of senior positions in the product development, finance and actuarial areas of Canada Life Europe — focused on Germany — he became the unit’s chief executive in 2009.
By the time Bolger was picked in February 2020, just before the world went into lockdown, to lead the wider Irish Life group, the European business had about 500,000 customers in Germany — placing it among the top five players selling through that country’s broker market.
The group he now leads has roughly a 40 per cent share of the Irish corporate life and pensions market, 26 per cent of the retail market, and 21 per cent of the action in health insurance.
Irish Life’s latest set of accounts show that the group paid €91.5 million in dividends in 2021 to its immediate parent and handed over a further €55.9 million in March of this year, even as it was monitoring the effects of the Ukraine war on financial markets and its business.
It brings total payouts to €996.4 million — or more than three-quarters of the €1.3 billion price Great-West Lifeco paid for the group in 2013 as the State sought to recover some of the €4 billion bailout of the assurer’s former sister company, Permanent TSB.
‘Really strong year’
The latest dividends came as the life and pensions subsidiary of the group, Irish Life Assurance, reported a €167 million net profit last year, while the figure for Irish Life Health amounted to €30.9 million.
But what has demand for its products been like this year, with financial markets in turmoil and confidence among companies and households ebbing as they find themselves dealing with inflation running at levels not seen the 1980s and euro zone interest rates on the rise for first time in more than a decade?
Bolger says the business has had a “really strong year” so far, with sales in its core life and pensions business “up about a third” in the first half of 2022 compared to the same period last year. Group earnings have risen by “about 20 per cent”.
‘On the corporate side, companies are adding new members [to their pension schemes] and giving salary increases, which is feeding through to increased pensions sales for us’
“Obviously, markets are down, so that’s impacting fee income. But offsetting that, sales are very strong. Persistency remains very strong across both corporates and retail customers, just as it did through Covid,” he says. Persistency relates to customers paying timely premiums on policies.
“On the corporate side, companies are adding new members [to their pension schemes] and giving salary increases, which is feeding through to increased pensions sales for us. And, again, our retail business is up on last year, even though 2021 was the best year for retail sales since the year the SSIAs matured,” he said, referring to the period between 2006 and 2007 when billions of euro in Special Savings Incentive Accounts matured. “That trend has continued into this year.”
Total retail life sales jumped more than 40 per cent last year to €1.89 billion, according to the annual report for Irish Life Assurance. The increase came as Irish households were saving as much as a third of their disposable income at the height of the pandemic, compared to about 10 per cent beforehand, according to Central Statistics Office data. Still, the savings ratio was almost 20 per cent as of the second quarter.
Bolger concedes that the retail side “may be a trickier market over the next 12 months” as households deal with surging energy bills and the wider cost-of-living crisis. He sees the corporate and health businesses offsetting any such slowdown. “So far, we’re not seeing any signs of a slowdown on the retail side,” he says.
The rate at which Great-West Lifeco has been recouping its investment comes even as it has backed Irish Life in a flurry of deals and investments in the past nine years.
Third-largest health insurer
In 2016, Irish Life positioned itself as the third-largest health insurer in the market through the acquisition of Aviva Health and the remaining 51 per cent of GloHealth, a business whose formation it had supported four years earlier.
In 2018, Irish Life bought Invesco, the Republic’s largest independent corporate pensions and investments consultancy. It followed up with a series of purchase of other intermediaries — including Acumen & Trust, Conexim Advisors, APT Workplace Pensions and APT Wealth Management, and Clearview Investments & Pensions. It also bought wealth management advisory firm Harvest Financial Services in late 2020.
Most of the deals — aside from Invesco — managed to avoid scrutiny from the Competition and Consumer Protection Commission (CCPC) because of the relatively small scale of each.
“Those acquisitions have performed better than expected. They brought in €16 billion of assets [under administration and advice] but they remain independent in terms of the product choice they offer,” says Bolger. “We’ve been very, very clear that those companies should pick the products and services that are best for their customers.”
Some €6 billon of the €16 billion of assets advised by its intermediary and wealth business units is invested in Irish Life products, he said.
Late last year, the group paid €230 million for Ark Life, the former AIB life insurance arm that stopped taking new business in 2012 and where Irish Life had been the administrator of policies and manager of investments. The seller was ReAssure Limited, a UK company that specialises in managing closed books.
Irish Life backed away from other deals, having circled both Goodbody Stockbrokers and Davy when they are on the blocks in recent years — even if it was more interested in their wealth units than their capital markets businesses. Bolger declines to comment on either.
Great-West Lifeco, which has more than 33 million customers across Canada, the US and Europe and the equivalent of about €1.7 trillion of assets under administration, has used Dublin as something of a Petri dish for innovation in recent times.
Dashboard of policies
“Ireland would be seen as leading the way within the group in terms of innovation and digital,” says Bolger. Asked for specifics, he says Covid prompted Irish Life to accelerate the digitalisation of its processes for financial advice and taking on new clients, which can now be done by virtual meetings and the electronic submission and cross-checking of forms.
It also launched a digital investment phone app, called Smart Invest, last year to make it easy for people to invest and track the performance of their portfolio. The group this week launched an app, called MyIrishLife, where customers can have access to a dashboard of all policies they have with various parts of the group.
Bolger welcomes the Government’s approval last week of draft heads of new legislation that would lead to the automatic enrolment of workers in occupational pension schemes — 15 years after the then-government first committed to such a plan. It should initially see about 750,000 workers aged between 23 and 60 and on more than €20,000 a year automatically signed up a pension plan in 2024, when the programme is scheduled to be formally introduced.
“I think the timelines are challenging,” says Bolger. While the Government is looking to build a new system, he says the process could be accelerated if it were to use existing pensions infrastructure in the State.
He argues that the plan, as currently envisaged, will contribute to gender inequality. “Often women tend to be in more part-time roles and will be affected by setting the limit at €20,000. We also think it needs more flexibility on payments to allow, for example, people coming back from maternity leave to make extra payments to make up for periods when they weren’t working.”
He maintains that the Irish system is pretty much insulated from the type of turmoil that struck the UK pensions funds sector in recent weeks
Bolger says the plan could also be improved to allow people approaching retirement to pay more into their pot.
He maintains that the Irish system is pretty much insulated from the type of turmoil that struck the UK pensions funds sector in recent weeks — even though Irish Life is a leading domestic provider of the type of product, called liability-driven investments (LDI), that were at the heart of the chaos.
LDI is an investment strategy used by defined benefit pension funds, where retirement income is based on individuals’ final salaries. While plain-vanilla LDI strategies use bonds — which generate predictable interest income — to match their payout liabilities, it recently became clear that a raft UK pension funds had used high levels of leveraged financial derivatives to increase their exposure to bonds they didn’t actually hold.
Wary of predictions
When UK bond prices slumped in the wake of Liz Truss’s ill-fated mini-budget last month, pension funds faced a spike in demand from firms on the other sides of the derivate deals for more cash as collateral. The potential collapse of some funds forced the Bank of England to step into the market to buy tens of billions of pounds of UK government debt.
Bolger says that of the €12 billion Irish Life’s clients have in LDIs, only €300 million is by way of derivatives, which also have much lower levels of leverage than many funds in the UK.
The Irish Life boss is wary of making calls on where financial markets are headed in the near term. “The approach we take as a business is to make sure our customers are invested in balanced portfolios,” he says.
The group faces something of a rebalancing itself after a sister company, Canada Life Irish Holding Company, entered a deal last year to set up a life and pensions joint venture with AIB. It will replace an arrangement over the past decade where the bank was an agent for Irish Life Assurance products. The new partnership is on track to launch by the year-end.
Might the venture, where AIB will be entitled to half the profits, cannibalise some of Irish Life’s business? “I don’t think so,” says Bolger, adding that much of the Irish market remains “untapped” and “underinsured in terms of life and protection products”.
“We’d be confident in Irish Life that we will be able to replace sales that would, in future, go through the joint venture.”
CV
Name: Declan Bolger
Position: Chief executive of Irish Life Group
Age: 47
Lives: Clontarf, Dublin
Family: Married to Shirley, a lecturer and researcher in DCU, with three children aged between six and 11
Something about him you might expect: “Being from Wexford, I’m a big hurling supporter and enjoy coaching my kids’ GAA teams.”
Something that might surprise: He cycles to work most days and headed off to cycle a few Tour de France mountains in the Pyrenees last weekend.
