Aviva has announced the sale of private health insurer Aviva Health Insurance Ireland Limited (Aviva Health) to Irish Life.

Aviva holds a 70% stake in Aviva Health, a joint venture with AIB,  which owns the remaining 30%.

The sale is in line with Aviva's 'not everywhere' strategy of allocating capital to areas where it can generate strong returns.

Aviva Ireland said its general insurance and life and pensions businesses are unaffected by the announcement and business will continue as usual. 

Existing customers, corporate partners and brokers will see no immediate change as a result of the announcement. 

The transaction is subject to regulatory approval and is expected to complete by the third quarter of 2016.

At the half year 2015, Aviva Ireland Health had gross written premium of  €163m - 1% of Aviva's global gross written premium of €14.2bn. 

Commenting on the announcement, CEO of Irish Life Group Bill Kyle said that the new company will provide a compelling alternative to the existing health insurance offerings in the marketplace. 

"With the benefit of our local skill and market knowledge here in the Irish Life Group, supported by the financial strength and global experience of Great-West Lifeco, we believe Irish Life's new venture will become the health insurer of choice for Irish customers," Mr Kyle said.

"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," he added. 

CEO of Aviva Ireland Hugh Hessing 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."

Meanwhile Minister for Health Leo Varadkar has said that he welcomes Irish Life's decision to purchase Aviva Health Insurance. 

He said: "It is another positive endorsement of the Irish economy and of the health insurance market in Ireland by a large international company."

Earlier, Chief Executive of GloHealth Jim Dowdall said that this will be a very welcome development for all Irish health insurance customers.

"While existing customers will continue to enjoy the benefits of their current health insurance plans and the same customer support as normal, we have exciting plans for all of our customers present and future.

"We will keep customers up to date on the positive developments ahead," Mr Dowdall said.

Elsewhere, health insurance consultant Dermot Goode said: “While this action effectively reduces the number of competitors in the market, it does bring the largest Life company firmly into the market and I’d expect that they won’t be content with third position for long and will probably look to substantially increase their market share.

"This is good for consumers as the most effective way for an provider to increase the number of members it has is it offer lower prices and better cover.

"Irish Life have always been strong on innovation, so it will be interesting to see what they bring to the health insurance market,” Mr Goode added.