Aviva Ireland wants to increase its market share in pensions and life-assurance, having completed a €130m acquisition of Friends First, writes Eamon Quinn.
Friends First’s 250,000 customers will not be affected by the purchase, which will first require the green light from regulators, Aviva said.
However, the tie-up, which creates a new life business controlling about 15% of the Irish assurance market, will still be considerably smaller than market leader, Irish Life — owned since the financial crisis by Canada’s Great-West Lifeco — and other firms, such as New Ireland and Zurich.
Both Aviva and Friends First are large users of brokers to sell their products. With 9% of the life market, Aviva appears to be signalling that it will want to grow again, either through acquisition or by taking business from rivals in an expanding market.
Achmea, the Dutch owner of Friends First, is now focusing on general insurance and has moved away from life business.
Aviva also said that Denis Kelleher, who previously worked at New Ireland, was joining Aviva, an appointment hailed as significant by a leading industry observer.
“It is a message of intent”, said Michael Dowling, chair of the mortgage committee at the Irish Brokers’ Association, of Aviva’s plans to grow aggressively.
He said Friends First is particularly dominant in the market for income-protection for so-called permanent health insurance, which is usually bought by the self-employed.
The deal secures for Aviva access to “a niche” product and an affluent market, Mr Dowling said.
The acquisition also means Aviva has dispelled any doubts about its commitment to Ireland, while leaving one fewer target for KBC Bank, which has said, in the past, that it wants to create a combined Irish bank and assurance business.
During the depth of the euro debt crisis, Aviva appeared to come close to pulling out of the Republic altogether and of running the business from Britain.
Aviva Ireland, which employs 1,200 people, said the acquisition will bring together the 320 staff at Friends First. It expects to offer “a small” voluntary redundancy scheme. Aviva Ireland reported, in August, that operating profit across all its business increased 12% from a year earlier, to €48m.
It said, at the time, that it had seen a “significant growth in sales of retirement products and bulk-purchase annuities”.
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