Irish Life’s underlying profits rise to almost €200m

Canadian parent highlights ‘favourable morbidity experience’

Irish Life, the State's largest life assurance and pensions group, saw its underlying profits rise 36 per cent last year to 288 million Canadian dollars (€198.4 million), according to figures contained in its parent group's annual results.

The result was supported by fee income growth and what the parent group, Great-West Lifeco, termed as “favourable morbidity experience”, according to the accounts published this week. This can mean fewer health insurance customers required hospitalisation or treatment, or that less money had to be paid out to customers claiming income protection in the life side of the business.

However, some of this was partly offset by so-called “unfavourable mortality experience”. This can happen when a life company has experienced a spike in life assurance death claims. The Covid-19 crisis has driven such claims globally.

Conversely, an unfavourable mortality experience for a pensions business occurs when retirees who have entered into a regular income, or annuity, arrangement with the company live longer than its actuaries have calculated.

Irish Life’s fees rose to 772 million Canadian dollars last year from 752 million in 2020, according to Great-West Lifeco.

The Great-West Lifeco annual accounts give a limited picture of the performance of Irish Life. The underlying profit figure is referred to as base earnings, which exclude a number of potential once-off items, ranging from acquisition costs to legal settlements.

Greater disclosures are contained in annual filings by the Irish unit to the Companies Registration Office, normally in the middle of the following year.

Purchase

Winnipeg-based Great-West Lifeco bought Irish Life from the then Irish government nine years ago for €1.3 billion purchase price. It matched the price that then taoiseach Enda Kenny's administration paid Permanent TSB (PTSB), then known as Irish Life & Permanent, for the business two years earlier in order to limit the taxpayer bailout bill for PTSB.

Irish Life has paid €849 million of dividends to its overseas parent between 2013 and 2020.

Last November, Irish Life bought Ark Life from London-based Phoenix Group for a total cash consideration of €230 million. Ark Life, once owned by AIB, has been in run-down since 2012, but still manages a range of pensions, savings and protection policies for its customers in the Irish market.

Meanwhile, a sister company of Irish Life, Great-West LifeCo's Canada Life Irish Holdings Company agreed last year to enter a 50:50 life and pensions joint venture with AIB, as the bank seeks to re-enter this line of business. AIB has been a tied agent for Irish Life and pensions products for the past decade.

Irish Life has also been active in recent years in acquiring mid-market insurance brokers to drive more business its way.

Irish Life said its share of the State’s life assurance market stood at 34 per cent last year, while it had a 26 per cent slice of the life and pension market. It is the third-largest private health insurer, with a 21 per cent market share.

The group’s Irish Life Investment Managers (ILIM) unit is one of the largest institutional fund managers in the Republic, with €103 billion in assets under management as of the end of December.