AIB's life assurance business subsidiary has been sold to Hibernian Life and Pensions to create a third force in the Irish life assurance and pensions market, it was announced today.
The deal brings together Hibernian, the third-largest company in the Irish long-term savings market, and Ark Life Assurance the fourth largest, to create a business worth some €1.3 billion.
The new business will be 75 per cent owned by Hibernian, which also paid €195.4 million in cash to AIB. A further deferred cash payment of up to €10 million is payable subject to performance targets being met.
Bryan Jenkins, chief executive, Hibernian, said described the deal as "transformational" for Hibernian as it gives access to AIB's branch network of 280 offices and 1.6 million customers.
The investments of current Ark Life policyholders, which totalled €2.6 billion at the end of 2004 will be transferred to Hibernian Investment Managers.
The new venture will employ 800 staff. Tony O'Riordan, managing director of Hibernian Life & Pensions, will become managing director of the joint venture.
Completion of the transaction is subject to the approval of the European Commission and the Financial Regulator. The deal is expected to be completed in the first quarter of 2006.
Shares in AIB were 0.5 per cent higher at €17.75 in Dublin this morning while Hibernian's parent, Aviva, was up 0.3 per cent at £7.04 in London.
The finance workers' union today sought assurances that the sale of Ark Life would not affect staff.
The General Secretary of IBOA, Larry Broderick said "IBOA will be seeking absolute guarantees that staff terms, conditions and benefits are fully protected prior to the sale and that members jobs are secured into the future."