Canada Life's 54,000 qualifying policyholders in Ireland will receive free shares worth on average £1,746 (€2,218) to £2,583 when the life assurance group is floated on the Toronto and Montreal stock markets later this year.

Fewer than one-third of Canada Life's 180,000 policyholders in Ireland qualify for free shares, largely because the relevant Canadian legislation is restrictive as to who had an entitlement.

More than half the qualifying shareholders are "carpetbaggers", who took out with profits policies with Canada Life in the first half of last year in anticipation of demutualisation and free shares.

The amount of free shares issued to qualifying policyholders will vary widely, but a minimum allocation of 100 shares worth £831 to £1,230 will be paid to policyholders, with bigger allocations dependent on the size of the premium and the policy's cash value. This means that the 30,000 carpet-baggers will receive smaller allocations. The exact value of the free Canada Life shares will not be determined until the initial public offering later this year or early next year and, for Irish shareholders, will also vary with the exchange rate against the Canadian dollar. However, Canada Life's advisers estimate the company's May 21st value at Can$2.5 billion to Can$3.7 billion (£1.3 billion to £1.9 billion).

Based on the 156 million shares in issue then, Canada Life shares have a May 21st value between Can$16.03 and Can$23.72 (£8.31 to £12.30).

On this basis, the average allocation of 210 shares is worth £1,746 to £2,583 while the minimum allocation of 100 shares is worth £831 to £1,230.

The allocation formula is made up of a minimum allocation of 100 shares, equivalent to 25 per cent of the total issue. Further allocations are based on the size of the premium and the cash value of the policy. One quarter of the free shares is being allocated based on the size of the annual premium while the remaining 50 per cent of the shares will be allocated on the size of the policy multiplied by the length of time the policy has been held.

Canada Life's assistant director-marketing, Mr Michael Kiernan, said the 54,000 qualifying policyholders had annual premiums as high as £10,000 in the case of a commercial mortgage down to as little as £300 in the case of a £25 a month policy.

Since with-profits policies have nil cash value for the first two years, the 30,000 carpetbaggers who took out policies within the past 18 months will receive little more than the minimum allocation of 100 shares.

All of 54,000 qualifying policyholders will receive details of their share allocation in late July or early August and can vote by proxy at a special meeting on the demutualisation on September 16th.