AIG to put Laya Healthcare on market for as much as €200m

US insurance giant AIG is set to put Laya Healthcare, the Republic’s second largest health insurance provider, on the market for as much as €200 million, eight years after acquiring the business.

AIG chief executive Peter Zaffino told analysts on May 5th the firm intended to sell Laya as it narrows the focus of its Corebridge Financial unit, in which the Irish company sits, to focus on life assurance and retirement products.

“After a comprehensive review of the health product offering we decided to evaluate strategic alternatives and a potential sale of Laya Healthcare, the private medical insurance business in Ireland,” Mr Zaffino said. “We believe this will help to streamline the Corebridge portfolio and allow it to focus on life and retirement products and solutions.”

Laya has more than 500,000 customers and about a 30 per cent share of the Irish health insurance market. It has about 600 employees. Industry sources estimate that the business will fetch between €160 million and €200 million.

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AIG spun off Corebridge through an initial public offering (IPO) and flotation on the New York Stock Exchange last year, but retains a 77 per cent stake in the business that counts private equity giant Blackstone as its second largest investor with a 9.9 per cent holding.

Corebridge’s chief executive Kevin Hogan said on a separate call this week that while Laya was “a very good business” with a “strong management team”, the health insurance industry “is not core to life and retirement and our other expertise”.

“It’s very early in the process, so I can’t really say much more about that at this time,” he said.

Laya traces it roots back to the formation of Bupa Ireland in 1997, which ended VHI’s monopoly on the State’s health insurance market. The business was bought in 2007 by Quinn Insurance and restructured as Laya after administrators were appointed to Quinn Insurance in 2010.

Cork-based Laya was the subject of a management buyout in December 2011 with the support of an underwriter owned by Swiss Re, before AIG acquired the business in 2015 in a deal worth about €80 million.

In the area of health insurance Laya is a tied agent of Swiss Re’s Elips Insurance subsidiary, which underwrites coverage for the Irish company’s customers. Laya is also a tied agent of Swiss Re’s Iptiq unit for life insurance products.

Laya recorded €89.5 million of turnover in 2021, which was essentially made up of commissions for the sale of insurance coverage, according to its most recent set of accounts filed with the Companies Registration Office (CRO). That was up from €80 million for 2020.

The company, led by managing director Dónal Clancy, saw its pretax profit rise by 30 per cent to €28.9 million in 2021. It paid a total of €40 million in dividends to Corebridge between 2020 and 2021.

AIG moved Laya from its AIG Europe Holdings unit in 2021 to sit within Corebridge as it prepared the latter for a stock market flotation.

The US firm has been in operation in the Irish market since 1977. Its local business currently employs 160 people in general insurance and has over 500,000 customers. The company in March entered a deal to underwrite a new motor insurance offering for fintech Revolut.

AIG currently has about a 7 per cent share of the Irish motor market, leaving it in about eighth position among the main players in this area.