Irish Life and Permanent has reached agreement on the sale of two of its businesses in the US, Interstate Assurance Company and First Variable Life Insurance Company for an estimated cash deal of $253.1 million.
The price is at a slight discount to the value placed on the two businesses in ILP's end of year accounts, but Stewart Draper, analyst at Dolmen Butler Briscoe says it is a good strategic move for the company.
'It's a sensible move to get these poorly performing businesses off the books for cash, even if it is at a slight discount to the value placed on them in ILP's books,' said Draper.
He said the deal was in line with the company's only strategy and made ILP the most attractive candidate for a takeover by a European acquirer.
Protective Life Assurance will buy the companies, which are both focussed on the US Life and Annuity market - subject to US regulatory approval.
ILP's move into the American market was not a success, with the company unable to generate the necessary scale to make serious inroads.
'Irish Life has no dog on its books now, and is the cleanest of all the Irish banks from an outside buyers' perspective,' said Draper.
The deal is expected to close in October of this year, and the decision to sell Interstate and First Variable follows a review of the company's strategy in the US announced earlier this year by Group Chief Executive David Went.
Irish Life & Permanent is continuing with its strategic review with regard to its remaining US business, Guarantee Reserve Life Insurance Company.
The company said that Friday's decision is in line with the financial institution's 'Ireland First' strategy as the Group concentrates on consolidating its leadership position in the Irish market.
Earlier this year the Group successfully completed the acquisition of Ireland's TSB Bank. It is currently engaged in the merger of TSB Bank with Irish Permanent to create a major force in the Irish personal financial services market.
