Irish Life is joining with the existing management of Woodchester Investment Brokers to purchase the group for an estimated £20 million. The two parties are in advanced discussions with GE Capital to acquire the insurance brokers and have undertaken a due diligence examination of the business, The Irish Times has learned.
An Irish Life spokesman confirmed yesterday that discussions were taking place.
Industry sources suggest the acquisition would be in line with the group's stated growth policy of developing distribution channels to affinity groups such as trade union members.
Woodchester Investment Brokers is one of the largest independent brokerages operating in the Irish market and also has a presence in Northern Ireland. It has a substantial client base and is particularly strong in the provision of group affinity schemes in the health, pensions and motor insurance sector.
Its clients include members of the two main teachers' unions and of the nursing union. The Irish National Teachers' Organisation, with 26,000 members, and the Association of Secondary Teachers in Ireland, with 15,000 members, have the biggest single group scheme. Many of the group schemes would be tied with Irish Life already, although the brokerage operates on an independent basis.
Woodchester Investment Brokers was taken over by GE Capital when it purchased the Woodchester group last year, but would have been viewed as being outside GE's core business.
Industry sources estimate that the brokerage generates annual premium income of up to £70 million and is highly profitable. The group, which employs 100 people, also has modern and efficient information technology systems.
The company was established by the current chairman and chief executive Mr Mervin Percival who subsequently sold it to Woodchester. He, together with two other directors, Mr Michael O'Brien and Mr Robert Power, is seen as key management and is expected to be part of the bidding consortium. If the deal goes ahead, the brokerage will continue to be run by the current management. To maintain its business base, it would have to be seen to continue to operate as an independent adviser to its clients, according to industry sources.
Irish Life chief executive Mr David Went has frequently pointed to the development of distribution links to affinity groups in the US market as the fastest-growing means of selling life and investment products. The group is also focusing on developing other distribution relationships, such as those forged with Ulster Bank, Irish Nationwide, TSB and Dunnes Stores. Improving its distribution network and protecting its market position are the two key challenges Irish Life faces in the domestic market. It is particularly keen to develop its branch-based distribution - at the moment, just 8 per cent of its products are sold this way.
