The State-owned health insurer, VHI, will begin immediately to recruit a new chief executive following the announcement that Mr Oliver Tattan will not renew his contract with the group.

Mr Tattan (34), who was acting chief executive and employed on yearly contracts, will leave the VHI to join a technology start-up. His contract was due to expire at the end of December and his resignation was announced yesterday.

Mr Tattan has been at the company for two years moving there from the Trade Board. He had been chief executive at the State agency for two years but did not take a post in the new organisation created when it was merged with Forbairt to form Enterprise Ireland. He received a reported settlement of £150,000 (€190,000) when he left in 1998.

Mr Tattan was appointed as acting chief executive at the VHI and on a renewable contract basis because the group wanted to circumvent the public service pay limits. A spokeswoman said yesterday that a sub-committee of the board of directors has already started a recruitment process to appoint his successor.