Aviva in advanced talks to buy Friends First

Sale of Irish insurance group had attracted several suitors including ‘zombie’ specialists

Friends First HQ

Friends First HQ

 

UK insurance group Aviva is in advanced talks to acquire Friends First from Dutch group Achmea, according to sources. The Irish life assurance, pensions and investment firm has more than €4 billion of assets under management.

Bank of Ireland’s New Ireland Assurance subsidiary also had a look at the business, which was put up for sale in recent months, but is no longer in the running, the sources said.

The talks are not yet at a stage where Aviva has been declared a preferred bidder.

KBC Bank Ireland had been tipped by analysts as a potential suitor. It has stated publicly it is interested in buying insurance and banking assets to scale up the Dublin-based operations after its Belgian parent reaffirmed its commitment to the Republic earlier this year. However, the bank is not thought to have had a serious interest in pursuing this opportunity.

Spokeswomen for Aviva and Friends First, which employs 300 people and has 281,000 Irish customers, as well as spokesmen for Bank of Ireland and KBC Bank Ireland declined to comment.

Friends First, which traces its roots back more than 180 years and generated €602 million in premiums last year from life protection, investment and pension customers, reportedly attracted the interest of so-called zombie insurance specialists, which focus on running off closed life insurance portfolios over time.

It is possible that some of the company’s books could end up being sold on by Aviva to one of these firms, should the UK insurer agree a deal.

Friend First’s total premiums increased by more than 21 per cent last year from €497 million in 2015.

The company has been led by chief executive Tom Browne since 2012. Mr Browne told staff in an internal email in late August, when it first emerged that the business was up for sale, that reports about its future was media speculation.

Aviva, which has close to 1,100 employees in Ireland, according to its website, is currently advancing plans to change its legal structure in the Republic to become a full-fledged subsidiary of its UK parent.

The move comes in the wake of the Brexit referendum last year and reverses corporate structure changes that resulted in Aviva Ireland becoming a branch of the UK business for general insurance in 2012 and life insurance in 2015.

Achema, formerly known as Eureko, took full ownership of Friends First 15 years ago. However, the Irish unit has been the subject of perennial speculation since the Dutch parent, Europe’s third-largest mutual insurer, made an abortive attempt to merger Friends First with publicly-quoted insurance company FBD Holdings in 2008.

Canada Life, owned by Toronto-listed Great-West Lifeco, was said to have been interested in Friends First earlier this decade before the former went on to acquire Irish Life in 2013 in a €1.3 billion deal.