Canada Life likely to bid €1bn for IL&P life assurance arm in weeks
CANADA Life has emerged as the likely new owner of Irish Life and Permanent's (IL&P) life assurance business.
Canada's second-largest insurer is the front runner with some sources suggesting it could soon pay more than €1bn for the business. Two other groups submitted bids for the company.
The Government will be keen to seal a deal with Canada Life in the coming weeks. Failure to sell that business before the end of this year would force the Government to inject more than €1bn into it as part of the recapitalisation of IL&P.
If it fails to get more than €1bn, the Government will have to cough up the shortfall.
The bank and life assurance group has been ordered by the Central Bank to raise €4bn in fresh capital to shore up losses at its Irish Permanent banking division after it was stress tested. Taxpayers have already put €2.7bn into the failed business that is 99pc state-owned.
Selling its life assurance arm is part of that fund-raising effort and would yield a significant saving for the taxpayer.
The Government wants to see international investors putting money into the distressed banks to reduce the overall cost of the bailout. So far a group of investors that included financier Wilbur Ross have taken a 35pc stake in Bank of Ireland.
There was significant interest in the Irish Life assurance business from overseas investors with JC Flowers and Apollo Global Management coming together to make a bid. Another offer was received from CVC Capital Partners.
The Government has agreed to conclude the sale by the end of the year in the next Memorandum of Understanding with the EU/IMF/ECB.