Tuesday 20 February 2018

State considers pumping €4bn into IL&P

Laura Noonan

THE Government is considering pumping as much as €4bn into Irish Life & Permanent at the end of July and clawing back some of the cash later in the year when the plc's life insurance business is sold.

The news comes amid growing acceptance that there is a "strong possibility" that IL&P will not hit its target of selling off Irish Life Assurance by the end of July.

The latest memorandum of understanding agreed with the European authorities and the International Monetary Fund clears the way for the Government to partially recapitalise IL&P in July, allowing a credit for the life insurance sale.

The Irish Independent understands, however, that this option is seen as problematic since it could prejudice the sale of Irish Life Assurance by giving the market an indication of what price would be acceptable.

The Government is now understood to be considering putting the entire €4bn into IL&P at the end of July, and then clawing back the extra capital when the life insurance business is sold.

A spokesman for the Department of Finance declined to comment beyond pointing to the memorandum of understanding which allows for partial recapitalisation pending the sale of Irish Life Assurance by the end of October.

A spokesman for IL&P declined to comment, as did a spokesman for the National Treasury Management Agency.

IL&P has engaged Deutsche Bank to "explore" options for selling Irish Life Assurance through a trade sale or flotation.

A flotation was initially seen as the preferred option, but a trade sale is seen as increasingly likely given the dire market sentiment towards Ireland at present.

Likely bidders in a trade sale include Zurich, which previously expressed an interest in buying New Ireland from Bank of Ireland, as well as other Irish insurers who aren't currently in the life insurance market.

Irish Life Assurance is also believed to have attracted some interest from insurance companies who are not currently in the Irish market, and may prove attractive to venture capitalists.

The life insurance company has an embedded value of about €1.7bn, but may be worth more if it is successful in its bid for Quinn Insurance's healthcare arm.

Irish Independent

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