Cardinal deal may spark AA expansion
Published 23/05/2016 | 02:30
AA Ireland is set to widen its insurance interests here if the company is taken over.
Irish private equity firm Cardinal Capital is reported to be in talks to take over the car insurance and breakdown services firm in a deal that is likely to be worth north of €150m.
News of the talks came as the car insurance specialist revealed plans to move into life insurance.
The company said it would offer both new and existing customers life insurance and mortgage protection.
AA Ireland's decision to move into life insurance was made with the full backing of Cardinal and it is thought that the move could be a precursor for the company to invest in other insurance products.
AA commercial director John Farrell said: "Entering the life insurance market was a fairly natural extension of the AA's product suite. With a large customer base slanted towards urban professionals, there is a strong reliance on AA products as they reach critical milestones such as buying a home or having kids," he added.
The insurance will be underwritten by Aviva.
Cardinal is believed to view AA Ireland as a way to bet on the recovery across the wider economy.
Car insurance is a compulsory purchase for any car owner so consumers cannot roll back on it if the economy was to struggle once again.
The breakdown services side of the business - on which AA built its brand - is seen as a hedge on the economy bet but is not material to Cardinal's rationale for buying the business.
If the economy falters, the breakdown business is likely to do well as consumers hold off from buying new cars for longer.