Market share boost for Irish Life if it wins AIB venture from Aviva
IRISH Life is set to gain another 5pc of the life insurance market after winning AIB's sizable life business from Aviva.
Sources said Ireland's largest life insurer was within "weeks" of finalising a deal to write all new life and pensions business previously sold under AIB and Aviva's Ark Life joint venture.
The deal will increase the amount the State can hope to get when it revives efforts to sell Irish Life, since the AIB tie-up wasn't priced into 2011's aborted sale process.
It is understood that while talks with AIB were at an advanced stage when Canada Life pulled out of the Irish Life takeover in late November, the Canadians had not been informed of the discussions.
"They'd have gotten it for free," one source said. "Now whoever ends up buying Irish Life will have to pay for it."
Irish Life may also end up taking over the existing book of more than 250,000 Ark Life policyholders, though sources said "no decision" had been made.
The dissolution of the AIB joint venture will halve Aviva's life insurance business, at a time when the insurer is already mulling massive restructuring.
Sources said the Ark Life blow would be cushioned by a "€100m to €150m" pay-off for Aviva to compensate its 25pc stake in the joint venture.
An AIB spokesman declined to comment on whether the bank would have to pay Aviva more than €100m to exit the existing arrangements.
It is understood that a new structure could be created that would allow another insurer to effectively take over Aviva's Ark Life stake, though this has not yet been agreed.
The AIB spokesman confirmed that the bank would assume responsibility for about 300 staff working for Ark Life.
A spokesman for Aviva last night said there were "great advantages" to exiting the Ark Life arrangements. Aviva said it now saw "enormous potential" to develop broker sales.
Sources close to Irish Life rejected suggestions it would face constraints, saying it sold life insurance for Ulster Bank, Permanent TSB and EBS and had not felt unduly constrained by those arrangements.