Bank of Ireland life insurance arm suffers €25m loss
BANK of Ireland's life insurance division swung to an underlying loss last year as people closed policies early and the insurer took a hit on its investment portfolio.
One of Ireland's top four life insurers, the New Ireland/BoI Life division was one of BoI's strongest performers in 2010, with underlying profits of €70m.
This turned to a €25m loss last year, even though New Ireland gained market share as its new business sales contracted at just 1pc against a market fall of 8pc.
Two of the biggest factors behind the life insurer's poorer performance were investment losses and "economic assumption changes". Both were linked to the wider financial crisis.
Investment performance came in behind expectations, while the "flight to safety" triggered a fall in the interest paid on "risk-free" investments, meaning New Ireland had to pencil in lower interest on its holdings.
In its results, New Ireland also noted that poor "persistency" -- or fewer people sticking with their policies -- had also been a challenge.
The poor persistency was linked to "affordability issues amongst customers" and "continued investment market volatility" which makes people reluctant to commit to life and pensions products.
Profits on existing business fell from €65m to €60m.
Despite the challenges, the life unit managed to grow new business profits by €10m to €23m on an "embedded value basis". Operating profit, on that basis, came in at €72m, up €6m year-on-year, but the investment losses and worse economic assumptions dragged the division to an underlying pre-tax loss of €25m.
Both Irish Life Assurance and New Ireland are set to change hands over the coming years, under the terms of their parent company's restructuring plans.