Irish Life, the country’s biggest life and pensions provider, is to be sold by the Government to Canada’s Great-West Lifeco for €1.3 billion.

The State is also to receive a €40 million dividend from Irish Life before the deal closes in July. The transaction is subject to regulatory approval.

Irish Life said yesterday that its million policyholders would be unaffected by the sale. Great-West Lifeco plans to retain the Irish Life brand.

The Canadian company already employs 600 staff here, through its Canada Life business domestically and functions associated with other European activities.

Canada Life, which has operated in the Irish market since 1903 and has 150,000 customers, will now be merged with Irish Life.

Great-West Lifeco said its operations would be consolidated at Irish Life’s head office in Abbey Street, Dublin.

The company envisages achieving annual pretax cost savings of €40 million over the next 18 months.

Voluntary redundancies

This will involve some voluntary redundancies, although the company declined yesterday to put a figure on this.

Allen Loney, president and chief executive of Great-West Lifeco, was asked why it had pulled out of a deal to acquire Irish Life in November 2011 and what had changed in the intervening period to persuade it to acquire the business now.

“We did withdraw in November 2011 but let me say that had nothing to do with the Irish business,” he said.

Mr Loney added that uncertainly over the future of the euro made his company hesitate about investing shareholder funds here but that picture had changed significantly.

Mr Loney said Irish Life was well capitalised, profitable for the last five or six years and had a presence in all sectors. “There is no question that Irish Life is the premier brand in this market,” he said.

This is a significant deal for Great-West Lifeco with Irish Life projected to account for 10 per cent of its 2014 global earnings. Mr Loney said the deal would be “transformational” for his company in Ireland and “material” to the business globally.

Based in Winnipeg, Great-West Lifeco has a market cap of about €19 billion and employs 18,000 staff.

Mr Loney said his company would be the “perfect partner” for Irish Life and “bring huge security and confidence” to policyholders.

The Minister for Finance Michael Noonan said it was not the Government’s policy to have financial institutions in public ownership.

Mr Noonan said the Government would “explore the possible sale of further tranches of these [banking] assets this year”.

When asked if this was the right time to sell Irish Life, Mr Noonan said: “We are not investment managers and we don’t run hedge funds.

“We are not going to take a punt on the markets on the basis that if we hang around we might get a better price.”