Irish Life takeover could yet be blocked because of 'stranglehold'
Published 21/02/2013 | 04:00
THE takeover of Irish Life by Great-West Lifeco could be scuppered on competition grounds because the new, enlarged entity would have a 40pc share of the life and pensions market, an expert has warned.
There is concern that the new company would have such a stranglehold that there would be a radical reduction in consumer choice.
A combination of Irish Life and Canada Life, the Irish operation of Great-West Lifeco, would have a new business market share which is double the nearest rival, New Ireland.
Irish Life has one million customers, while Canada Life has 150,000.
However, Irish Life also has a link with AIB where it sells insurance and pensions through Ark Life from more than 200 branches.
It is estimated that Irish Life will generate around €600m a year in premiums alone from its ArkLife sales through AIB branches.
Insurance expert Tony Gilhawley of actuarial consultancy Technical Guidance worked out that only three life companies will control 75pc of the new life and pensions business after the merger.
The merged entity is to retain the Irish Life name, with the other two main players set to be made up of Bank of Ireland's New Ireland and Zurich.
"The takeover of Irish Life by Canada Life's parent will further concentrate the life assurance market into a smaller number of players," Mr Gilhawley said in a report on the market.
The takeover will mean the market will become so concentrated that Irish Life, New Ireland, Zurich and Aviva
would control 85pc of the market. He said this could mean competition authorities might be forced to block the deal.
Mr Gilhawley said the enlarged Irish Life would have a 50pc share of the term assurance, or life insurance market, based on 2010 data from the central bank, the latest available on the life market.
The enlarged insurer will have a dominant 40pc-plus share of the single premium investment market, he added.
Bank of Ireland distributes pensions and life assurance products from New Ireland through its 254 branches.
The actuary said all bank branches, apart from Bank of Ireland, would be tied to Irish Life after the takeover.
A spokesman for Irish Life denied it would end up with a 40pc market share and insisted its share would be 33pc.
He said the market was set for more consolidation as premium income had collapsed.
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