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Update on Irish Life sale process
No doubt you will have heard over the weekend that the sale process of Irish Life came to an unexpected end on Friday evening.
The sale process had gone really well up to this point. We had received strong bids from three players in the final round, and we quickly identified a front-runner with whom we entered into detailed discussions. Agreement had been reached on the price and all the key contractual items by the middle of last week and the plan was to make an announcement in the week commencing 5th December.
Unfortunately, the pressure in the Eurozone last week – particularly the rise in French yields and the failed German bond auction – caused the bidder to reconsider investing in the Eurozone. We received a call at 7pm last Friday that they would be unable to complete the transaction pending the resolution of the Eurozone crisis. At this point the Department of Finance decided to suspend the sale process.
What now for Irish Life?
The first thing is that the process of separation from our banking partner permanent tsb will be completed by end quarter 1 2012. This is a necessary part of the bank re-capitalisation programme and also ensures that Irish Life is completely separate with its own governance and support functions.
Instead of selling the business to an overseas player, we’ve essentially sold the business to the government for €1.3bn. I’m sure they will want a commercial return on this investment. Indeed finance minister Michael Noonan was very clear on this over the weekend – ‘Irish Life is a very valuable asset and our plan is to run it as a successful profitable company’.
We’re lucky in that our business is highly cash generative and that we can fund our strategy from internal resources while still providing a handsome dividend to government. We are as determined as ever to continue to use that financial strength to support brokers by investing in technology, new products and continuing to show leadership by promoting the need for life cover and the need to protect pension tax relief. In addition, our forthcoming launch of Irish Life Financial Services will allow us to offer an even wider range of products and services to the broker market.
We greatly appreciate the support of the broker community at this time. We’re very conscious of the need to work with brokers to protect your incomes during these difficult times and we’re determined to continue to do that.
If you have any queries or question please don’t hesitate to contact your account manager.
Yours sincerely,
Gerry Hassett
CEO Irish Life Retail