AIB sells Ark Life unit to UK’s Guardian Assurance for estimated €350 million

AIB has sold its Ark Life subsidiary to UK-based Guardian Assurance, The Irish Times has learned.

The sum has not been disclosed but market sources put it at close to €350 million. The transaction is subject to regulatory clearance and is expected to close in the first half of next year.

Ark Life’s book is in run-down. It manages assets of €4 billion and has 270,000 policies. Guardian is a specialist in managing life and pensions books in run-off and this deal will give it £17 billion in assets and 850,000 policies.

Ark Life staff were informed of the sale last week although the bank did not disclose it publicly.

AIB told said the disposal “follows the completion of a comprehensive auction sales process involving a number of international investors”.

It said the “position of Ark Life policyholders remains unchanged” as a result of the deal.

In a statement, Jonathan Yates, chief executive of Guardian, said: "We are delighted to have been chosen by AIB to acquire Ark Life. We look forward to working with the Ark Life management team to develop our closed fund consolidation and reinsurance platform in Dublin."

Guardian said Ark Life was a "strategically important acquisition" and would provide a "platform for further M&A [mergers and acquisitions] growth" in Ireland.

Based in Lancashire, Guardian has provided life assurance, pension and annuity products for more than 190 years. It was acquired by private equity group Cinven in 2011 and also seeks to acquire books of business in the closed life assurance sector in Europe.

Latest accounts for Ark Life Assurance Co Ltd show that it made an after-tax profit of €37.8 million in 2012, up from €28.1 million in the previous year. Its total income rose by 17.7per cent to €472 million.

However, new business sales amounted to just €104.6 million, roughly a quarter the level of 2011.

This reflected the fact that it closed to new business at the end of March 2012 following a decision by AIB and Aviva not to renew their joint venture.

AIB bought out Aviva with a view to selling on the business. As of August 2012, Ark Life had 148 staff and they are expected to transfer to Guardian.

Having closed Ark Life to new business, AIB signed a deal with Irish Life to sell its products through the bank's branches. Irish Life is believed to have expressed an interest in acquiring the Ark Life book.

A spokesman for Irish Life said yesterday the sale of Ark Life by AIB would have “no impact on the business relationship for new business between Irish Life and AIB, which was agreed almost two years ago”.

Irish Bank Officials' Association general secretary Larry Broderick said he was "shocked" the union had not been advised of the sale.

“We will be seeking a formal meeting with the bank early in the new year to clarify the position in relation of our members,” he said.