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News : Irish Last Updated: Feb 19, 2013 - 3:09 PM

Government sells Irish Life for €1.3bn
By Finfacts Team
Feb 19, 2013 - 3:05 PM

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Irish Life headquarters, Dublin. Photo: Aramark Property

The Minister for Finance today announced that an agreement has been reached with  Great-West Lifeco (Canada Life) for the sale of  Irish Life for €1.3bn with an additional dividend of €40m being paid to the State prior to completion.

The agreement is conditional, most notably on receipt of regulatory approvals, which are customary in a deal of this nature.

Welcoming the agreement, Minister Noonan said: "The Irish economy is entering its third consecutive year of growth, our deficit is on a downward trajectory and we are beginning to attract the levels of investment required to create jobs and to make a full return to the markets.  This progress was one of the reasons that led Great-West Lifeco to renew their interest in late November 2012, almost a year to the day after they previously withdrew."

Great-West Lifeco’s Irish business, Canada Life (Ireland), is already a significant employer and is the largest Canadian employer in the State. Noonan said €10bn has been invested or committed in the past six months, mainly by international investors, in transactions managed by the State or entities controlled/owned by the State

Irish Life manages approximately 1m policies, with over €37bn of assets under management and employs 2,200 people in Ireland. Canada Life has over 150,000 customers in Ireland and was established in Dublin in 1903.

Irish Life was created in 1939 by amalgamation of nine British and Irish insurers. The Irish State had an 18% stake and it was raised to over 90% in 1947. 

Irish Life floated on the London and Dublin stock exchanges in a privatisation in 1991 and in 1999 a merger with Irish Permanent was agreed to form Irish Life & Permanent. 

In 2011, most of IL&P's shares were acquired by the State as part of a recapitalisation. In 2012 Irish Life spun was spun-off as separate entity. 

``I have no doubt that Irish Life is a much better and more efficient company for having been privatised,'' David Kingston, the company's retired chief executive, told The Irish Independent in 1998.

``That's because the transformation not only brought the disciplines of the market to bear on the company and its operations but also because all the staff became significant shareholders in their own right and became incentivised to push the business forward as a result."

Noonan said a €1.3bn cash injection would, combined with the Bank of Ireland Contingent Capital deal, and all other things being equal, would reduce the GGD (general government deficit) ratio to GDP from 121.3% at end 2013 (per Budget 2013) to 119.9%. As the acquisition did not constitute a capital transfer it will not have an impact on the GGB but the €1.3bn will positively impact the Exchequer deficit.

The €10bn worth of investment referred to by Noonan is made up as follows

  • Irish Life (€1.3bn)

  • Bank of Ireland CoCos (€1bn)

  • Bank of Ireland Covered Bond (€1bn)

  • Bank of Ireland Subordinated Debt (€0.25bn),

  • AIB Covered Bonds (€1bn),

  • NTMA Syndicated Tap of 2017 Bond (€2.5bn)

  • NTMA Treasury Bill Programme (€0.5bn)

  • ESB Bond (€0.5bn),

  • Bord Gais Bond (€0.5bn),

  • 4G Licences (€0.9bn),

  • NTMA SME Equity Fund (€0.2bn),

  • SME Turnaround Fund (€0.05bn),

  • SME Credit Fund (€0.2bn).

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