Two of the biggest players in the Irish life assurance and pensions market are to join forces under a deal announced this morning between AIB and UK insurance group Aviva.
AIB's Ark Life division and Aviva's Hibernian Life & Pensions will merge in a new joint venture. AIB will own just under 25% of the new entity and will also receive a cash payment of up to €205m. Hibernian is currently the third largest company in the sector, Ark Life the fourth.
AIB will also have exclusive rights to distribute the new joint venture's products through its branch network for five years. This deal is renewable for further five-year terms up to 2031. Hibernian Investment Managers will manage the funds of Ark Life policy holders.
The companies estimate the value of the two businesses combined at just over €1.3 billion, with sales of €226m last year.
The deal is subject to approval by the EU Commission and the Financial Regulator. Tony O'Riordan, Hibernian's managing director, will head the new joint venture, which will have 800 employees.
AIB said the new company would have scale and would be well positioned to benefit from the upturn in the life, pensions and investments market, while Hibernian chief executive Bryan Jenkins described the move as 'a transformational deal' which would give the company the opportunity to significantly grow its business.
The IBOA union said it would be seeking firm assurances from AIB about the impact the deal would have on its members in Ark Life.
AIB shares closed down six cent at €17.60 in Dublin this evening.
