First Active has switched its tied agency insurance business from Irish Life to Friends First. The business generates annual premium income of around £4.5 million per annum to Irish Life - around 6 per cent of the life assurer's annual premium income.

The move had been expected in the market following the announcement of a merger between Irish Life and Irish Permanent.

Commenting on its link with Friends First yesterday, First Active's group managing director, Mr John Smyth, said the arrangement would establish a framework under which further business opportunities could be identified. "The partnership with Friends First is a key milestone in fulfilling our strategy of keeping First Active at the leading edge of financial services in Ireland."

Friends First's managing director, Mr Adrian Hegarty, said it entered discussion with First Active some months ago in line with its strategy of expanding its range of financial services. The link-up will give Friends First access to First Active's 500,000 customers and allow it to sell mortgage, savings and deposit products through its broker and direct sales network.

Friends First is a member of the pan-European Eureko Alliance. Mr Hegarty dismissed any suggestion that the new arrangement was a precursor to Eureko taking a strategic interest in the newly floated First Active.

Irish Life said yesterday it wasn't surprised at First Active's new arrangements, but stressed it had very strong relationships with other institutions that should expand and grow.

Irish Life has tied agency arrangements with Ulster Bank, TSB, Irish Nationwide and National Irish Bank. In most cases, the insurance products are manufactured by Irish Life but sold under the institution's own brand name. Analysts suggest the most vulnerable relationship following the merger will be with TSB. It offers a current account facility for Irish Life customers whose investments are maturing. This is likely to be eventually transferred to the Irish Permanent.

First Active forged its relationship with Irish Life in 1991, offering Irish Life's products to its customer base. First Active has total assets under management of more than £5 billion. It employs 1,200 with 590,000 savings customers and 85,000 mortgage customers in the Republic and Britain. Friends First employs 600 in Ireland, with offices in Dublin, Galway, Limerick, Cork and Waterford. It recently announced a £23 million investment programme to develop its operations in Ireland.