Irish Life is set to become a major player in the health insurance market here after acquiring Aviva Health and buying out the the 51 per cent of GloHealth that it didn't already own.
The will give the company, which is owned by Canadian financial giant Great-West Lifeco, more than 400,000 policyholders and make it the number three player in the market.
This move by Irish Life could be good news for consumers in Ireland. The company would be expected to compete aggressively with the two biggest players in the market - State-owned VHI and Laya Healthcare, which is owned by US insurer AIG - both in terms of pricing and product innovation.
Bill Kyle, Irish Life’s chief executive said that the new company would provide a “compelling alternative” to the existing players and would become the “health insurer of choice” for Irish consumers.
“We’ve been pursuing a strategy of significantly expanding our presence in the Irish health market, and acquiring Aviva Health and the balance of GloHealth is a dramatic step forward and positions us to offer something really innovative to customers.” Mr Kyle said.
Aviva Health was a joint venture with AIB, which owned 30 per cent of the business. It has about 300,000 policyholders.
GloHealth was launched in mid 2012 by former executives of Aviva and businessman Oliver Tattan with €8 million in financial backing from Irish Life, which held a 49.3 per cent stake. It has more than 110,000 customers.
In a statement, Aviva said the sale was in line with its “not everywhere” strategy of allocating capital to areas where it could generate strong returns. The company said its general insurance, and life and pensions businesses in Ireland would be unaffected by the sale of the health division.
Regulatory approval is expected by the third quarter of 2016.
In 2014, Aviva Health had gross written premiums of €330 million, but profits declined by 34 per cent to €12 million. In the first half of 2015, its profits reduced to €2.6 million from €5.1 million a year earlier while its gross written premium amounted to €163 million.
Commenting on the sale, Hugh Hessing, Aviva Ireland's chief executive, said: "Since acquisition in 2008, Aviva Health has contributed positively to Aviva Ireland's overall performance.
“However, the private health insurance market requires scale to deliver strong returns. Aviva Ireland will therefore focus on our two successful, core businesses of life and general insurance. This will allow us to continue to offer better products and services to over 750,000 Aviva Ireland customers.”
Irish Life contributed €204 million in profit last year to its Canadian parent, an increase of 11 per cent on 2014.
