250 jobs set to go at enlarged company

The sale of Irish Life to Canadian insurance giant Great-West Lifeco is expected to result in the loss of some 250 jobs from its enlarged status over the coming 18-24 months.

The well-flagged €1.3bn sale of Irish Life — which still requires competition and financial regulatory approval, and should take until July to conclude — was confirmed yesterday. It will ultimately see the company subsume Canada Life’s Irish operations under the Irish Life brand, with the enlarged business being housed at the latter’s existing Abbey St headquarters.

An additional €40m dividend — payable to the State prior to completion — gives the Government a marginal profit on the €1.3bn it paid for Irish Life last year, as part of the bailout of the then Irish Life & Permanent business.

Canada Life has had an Irish presence since 1903 and has a 5% share of the country’s life and pensions market. The mix of it and sector leader Irish Life is expected to contribute around 10% of Great-West Lifeco’s annual revenues.

Great-West CEO Allen Loney said the deal “affirms our long-term commitment to Ireland” and represents “a good culture fit“.

Irish Life chief Kevin Murphy called it “a great day for Irish Life” and “a significant day and a huge endorsement for the wider life and pensions industry in Ireland”.

Mr Loney said Great-West “is here to create jobs, not destroy them”, but admitted there would be voluntary redundancies and natural attrition in the short-term.

While he didn’t confirm any numbers, it is understood that around 250 positions will go as the enlarged company seeks cost reductions of €40m within its first 18 months of consolidation. He said redundancies would fall fairly between both Irish Life and Canada Life staff.

Mr Loney added that the Canadians’ failure to land Irish Life last year was less to do with the quality of the asset and more to do with the economic downturn and eurozone debt crisis, adding that the change in Europe, and particularly Ireland, has been transformational and that he foresees good growth prospects. He added that Ireland is a key strategic market for Great-West.

Finance Minister Michael Noonan hailed the sale of Irish Life as “a very good deal” and “a historic transaction”, in that it marks the first nationalised institution to be resold by the Government into private hands. He said Irish Life had attracted around 50 initial expressions of interests

He added that the Government does not have a firm timetable regarding the sale of more banking assets — most notably, AIB and its minority shareholding in Bank of Ireland — but that further tranche sales will be looked at during the year.

Asked about the potential to hold out for an even better deal on Irish Life, Mr Noonan said it was a “very opportune” time to sell and it would not have been responsible of the Government to “hang around and take a punt on a price”.

He reiterated that it is not government policy to hold onto its bank stakes, saying that “as soon as we get value, we get out”.

This deal, he noted, shows that full recovery — on behalf of the taxpayer — can be achieved.

Meanwhile, PIBA — the country’s largest financial brokerage representative — welcomed the deal, saying it counted as “a strong vote of confidence” in the life and pensions market here.

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