AIB gives Irish Life market boost

IRISH Life’s share of the life assurance and pensions market is set to increase past the 30% mark on the back of the company signing up to be AIB’s new third-party provider.

That deal is expected to be finalised inside the next couple of weeks and follows AIB’s decision not to renew its existing partnership with Aviva.

Neither party is revealing much at present, but a spokesperson for Irish Life said yesterday the company was in ongoing talks with AIB.

It is understood that what remains to be agreed upon are the legal aspects of the deal.

The importance of such a deal to Irish Life cannot be over-estimated. A successful completion will increase the company’s market-leading position comfortably, by adding about 6% in market share per year.

That puts clear water between Irish Life and rivals such as Bank of Ireland and Zurich Ireland, both of which have market shares of about 20%.

While Bank of Ireland could not have benefited from Aviva’s loss, it is understood that Zurich was interested in working with AIB, which would have closed the gap on Irish Life.

“Consolidation opportunities within the Irish marketplace are not common at the moment, so picking up a contract that provides such scale of growth should be very useful to Irish Life,” an industry source said.

“It will make the company clear market leader in the area of life and pensions and add value to the company whenever the time comes for it to be sold, which is good news for the taxpayer as it ultimately owns the company at this time.”

Eamonn Hughes, financial analyst with Goodbody Stockbrokers, said the deal will provide more certainty for AIB in the short-to-medium term given Irish Life’s stable position in the marketplace.

“Having said that, with Irish Life still potentially up for sale, a change of owner is possible at some stage in the future.

“The deal will increase Irish Life’s percentage market share from the high 20s into the low 30s, making the state-owned enterprise the clear No 1 player. In time, this will be helpful for the eventual price tag.”

However, despite speculation that this deal might boost the Government’s chances of selling Irish Life, such a disposal still is not anticipated for another number of years.