Insurance market to consolidate

FURTHER consolidation in the Irish insurance market looks to be underway.

If the shakeout becomes a reality it will reduce consumer choice even further at a time when the cost of motor and general insurance have gone through the roof in this country.

If it goes ahead, it will further reduce competition in a market where the cost of insurance cover has become one of the major issues in the country. Central to the latest takeover speculation is Eagle Star, subsidiary of the struggling Zurich Financial Services group.

It had undergone a series of changes, having withdrawn from a number of its markets last year, in an effort to cut costs and shore up its profitability.

Its restructuring was quite extensive at the time, but in the course of the shake-up Eagle Star remained untouched and the Switzerland-based group made no statement about its future plans in the Irish market.

Since then it has emerged that several players in the Irish market have set their sights on Eagle Star. One report yesterday suggested they were running the slide rule over the Irish business with a view to buying it.

Eagle Star cover the market spectrum, offering life and pensions and general insurance cover.

It has been rumoured, but not confirmed, that AIB Group is close to buying the company’s life and pensions business to subvent its own Ark Life that has struggled to make an impact on the Irish life and pensions market since it was set up some years ago.

An AIB spokesman refused to comment on a possible deal, while Axa, owners of PMPA, confirmed it was interested in buying the general insurance business.

Axa's chief executive John O’Neill said, if a business like Eagle Star became available, he would be very interested in it subject to monopoly considerations being satisfied.

Eagle is the fifth largest non-life insurer with income of €872m last year.

However, any move by the major player in the market which includes Hibernian and Allianz as well as Axa would raise serious competition issues.

With the cost of business insurance doubling and quadrupling for some firms over the last two to three years the loss of Eagle Star to any of the top three firms mentioned above would be sure to face stiff political and business opposition.

In the case of AIB’s unconfirmed role in the Eagle Star sale, the bank has made no secret of its desire to consolidate its position in the life and pensions market.

Pensions are big business and Ark Life.

It has been particularly active in the introduction of PRSAs.