Cross-selling bid behind deal for Friends First
Friends First CEO Tom Browne will assume the role of chief operating officer at Aviva Ireland once the UK insurance group's takeover bid is completed next year.
The decision to move Mr Browne - a 20-year veteran of the industry, and the head of Friends First since 2012 - into Aviva's top management ranks comes amid speculation about the group's expansion strategy after the merger.
Aviva yesterday announced it has offered €130m in cash for Friends First, which specialises in life insurance, and is market leader in income protection.
Following the deal, Aviva is expected to target greater market share by cross-selling from its existing general insurance platforms in combination with Friends First's life business.
Investec's Owen Callan said that strategy would shake up the sector, challenge the dominance of the three main players and deliver greater efficiencies following the merger.
It would mirror Aviva's approach in the UK where a management reshuffle grouped life and general insurance into one business to boost cross-selling.
Aviva has been eager to expand its Irish life insurance reach for some time and struck after Dutch insurer Achmea moved to offload its non-core Friends First unit.
In 2016 Aviva sold its Irish health insurance business to Irish Life.
The Aviva-Friends First tie-up is subject to regulatory approval from the Central Bank of Ireland and the firms must continue to compete until the deal closes in March or April.
The final sale price may rise to €220m, depending on Friends First's net asset value at the close.
Aviva's market share will swell to 15pc after the merger. That still leaves it at some distance from the sector heavyweights - with Irish Life accounting for close to 40pc, while Bank of Ireland's insurance subsidiary, New Ireland Assurance, and global giant Zurich both hold close to 20pc of the market.
"Friends First is an excellent business and will be a great addition to Aviva Ireland," said Aviva Ireland CEO John Quinlan.
"Their expertise in the area of income protection and group risk, in particular, will complement and strengthen the broad range of insurance products we offer our customers.
"It will also make us the leading insurer for brokers in the Irish market.
"Together, our market-leading insurance business will be well placed to take full advantage of Ireland's fast growing economy."