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THE Government has purchased Irish Life & Permanent's life assurance business -- the Irish Life Group -- for €1.3bn.

The High Court has given its approval to the Minister for Finance to go ahead with the purchase.

The life assurance company had been put up for sale by its parent company Irish Life & Permanent (ILP) last year. However, the planned sale fell through due to concerns about the eurozone.

In a statement, ILP said that Irish Life will now be directly owned in its entirety by the Government.

ILP said the Finance Minister intends to dispose of it as "soon as market conditions permit".

The proposed sale is part of the recapitalisation of ILP as required by the Central Bank, the EU Commission, the IMF and the ECB.

As part of the requirements put on banks following the IMF bailout, ILP was identified by the Central Bank as requiring to raise €4bn of additional regularity capital. €2.9bn of was to be generated by July of last year, with the remainder by June 2012.

Last July the Government recapitalised ILP by €2.7bn, while the balance was to be generated by the sale of Irish Life.

Counsel said that such a move would be beneficial for both the State and the shareholders, as it would allow for the complete separation of ILP's life assurance and banking businesses.

They also pointed out that a report from the rating agency Standard & Poor's indicated that the separation of Irish Life will result in its credit rating being raised.