Britain's Sun Life and Provincial Holdings has agreed to sell its wholly-owned Irish life assurance business to Royal Liver Assurance for £103.4 million (€131.3 million). The business consists of Caledonian Insurance Company and GRE Life Ireland, trading as Guardian Life Ireland. The deal is expected to be completed in the first quarter of 2000.
The life business was put up for sale following the takeover of the GRE-owned Guardian PMPA by the French group, AXA. The deadline for bids expired last month but the consideration is much higher than speculated. A number of domestic assurers, such as Irish Life, New Ireland, Ark Life and Friends First, were said to have been likely bidders. Competition among the bidders is understood to have been intense. This, in conjunction with the surplus capital of £150 million in Guardian Life, led to the high price being paid, according to reliable industry sources. This surplus can be consolidated into Royal Liver's accounts and used to further expand its operations.
Mr Mark Wood, chief executive of Sun Life and Provincial Holdings, said: "The disposal of Guardian Life Ireland represents a further step in our strategy of focusing on key markets where we have significant market share, such as the non-life insurance business in Ireland, Guardian PMPA, which is a core holding of the group".
Guardian PMPA generated non-life net premium income of £268.2 million in 1998. This represented 19.1 per cent of the total. However, it dominates the motor business, accounting for 29 per cent of the total.
Mr Brian McCaul, chief executive of Royal Liver, said the acquisition "provides a proven workforce, incremental funds under management of some £300 million and valuable distribution in the Irish life market, to complement our existing direct sales business in Ireland". He said it "fits well with our strategy for developing our business in Ireland, offering a wider range of products to our customers".
Both Guardian and Royal Liver have only a very small presence in the Irish life assurance market. Guardian, which sells through brokers, generated £29.2 million gross premium income in 1998; that represented less than 1 per cent of the market. Royal Liver, which sells direct, generated £79.4 million, representing 2.4 per cent of the total.
