The European Commission has approved the acquisition of Irish Life by insurance giant Canada Life, ruling that the proposed transaction will "not significantly alter" the insurance market structure in Ireland.
In a decision published yesterday, the commission found that a sufficient number of competitors will remain in the market following the completion of the deal, noting in particular the presence of recent market entrants. A more detailed finding will be published in due course following consultations with both companies.
Among the recent entrants to the Irish market are Liberty Mutual and State Street Global Investors, which acquired Bank of Ireland Asset Management in late 2010.
The Government announced the sale of the State-owned life assurance and pensions company to Canada Life’s parent company Great-West Lifeco for €1.3 billion in February. An additional dividend of €40 million is to be paid to the exchequer before completion.
Market share
While Irish Life is one of the State's largest insurers, with around a million customers, Canada Life holds only about 5 per cent market share. Following the merger, Canada Life, which has had a presence in Ireland since 1903, will be subsumed under the Irish Life brand.
The company is seeking voluntary redundancies as part of a €40 million cost reduction plan, with around 300 jobs expected to go.
Following the deal, Irish Life will control around 35 per cent of the market. The State's other main providers are New Ireland Assurance, which is owned by Bank of Ireland, and Zurich.
The European Commission said it had examined the competition impact of the acquisition across a number of life insurance products, namely pure risk protection products and pension products for individual and group clients, and saving and investment products.
Pension products
As well as providing pension and insurance products for individuals, Irish Life has a significant number of public service union members.
The insurer also has an investment in Allianz and a 49 per cent holding in health insurance company GloHealth.
In addition, it sells insurance and pension products through a partnership with AIB.
The Government acquired ownership of Irish Life for €1.3 billion last year, following the decision to split State-owned Irish Life and Permanent into its constituent insurance and banking entities.
While Irish Life had been for sale for the previous year, the euro zone crisis had scared off prospective buyers, including Great-West Lifeco.
An auction in November 2011 also attracted interest from US private equity firms JC Flowers and Apollo Global Management, as well as a number of international investors.
The green light from European competition authorities now paves the way for the deal to be closed, with the integration of the two businesses likely to be completed next year.
Canada Life is expected to move to Irish Life’s Abbey Street headquarters.
Irish Life had more than €37 billion of assets under management at the point of sale, and 2,200 employees.
