The managing director of the Galway-based life assurance group, NZI Life, Mr Gerard O'Connell, has taken full control of the company after buying out the 80 per cent shareholding in the company held by the British group, General Accident.

No consideration has been disclosed, but it is thought to be in the region of £10 million - payable in dividends rather than in cash.

General Accident itself is planning to enter the Irish life and pensions market early this year in what will be a major challenge to the existing players in the industry.

As a result, it had little option but to sell its stake in NZI or else use the Galway group as the vehicle for its expansion into the Irish market.

The fact that NZI operates largely through a direct sales force was one factor which ruled out a full acquisition of the company by General Accident. The British group acts mainly through brokers and its new Irish operation will be almost totally based on sales through the broker network.

NZI Life was set up in 1989, having evolved from a brokerage founded in 1982 by Mr O'Connell. A majority stake was subsequently acquired by NZI Corporation of New Zealand, which, itself, was later acquired by General Accident. Since then, the group has grown to the extent where it has policyholder funds of around £50 million.

Mr O'Connell said that NZI generated embedded value profits and statutory profits of around £2 million last year and each of its 12 branch offices operated profitably.

NZI Life, however, is one of the smaller players in the Irish life and pensions industry and Irish Insurance Federation figures for 1996 - the most recent available - show that the group had annual premium income of £11.7 million and single premium income of £10 million in 1996, giving it a share of just over 1 per cent of the £2 billion Irish life and pensions market.

The group sells its products - savings, investment and protection policies - through a 180strong field sales force operating from 12 branch offices and also through independent insurance brokers. Its funds are managed by HSBC, the Hong Kong banking group which owns the Midland Bank in Britain. Mr O'Connell said he was certain that there was scope for a small operation like NZI in the ever-contracting Irish life and pensions market.

"Based in Galway, our costs are lower. In this business, the trend seems to be that companies are either big or small, with little room for the middle-sized companies. Market share isn't important to us, we are profitable at our current size."

He added that NZI - which pioneered direct selling of life and pensions in the 1980s - aimed to increase its sales force to about 200 people.