Canada's Great-West Lifeco buys Irish Life for $1.7 billion

Tue Feb 19, 2013 9:46am EST
 

By Padraic Halpin

DUBLIN (Reuters) - Canadian life insurer Great-West Lifeco (GWO.TO: Quote) bought state-rescued insurer Irish Life for 1.3 billion euros ($1.7 billion) on Tuesday in a deal that increases its presence in Ireland and lightens the Irish government's debts.

Ireland last year paid the same amount to take over Irish Life, formerly the insurance arm of bailed-out Irish Life & Permanent, after the euro zone debt crisis forced the suspension of its sale in late 2011.

Great-West Lifeco, which was the lead candidate to buy the group before pulling out of the original sale process, said it would merge Irish Life, the country's largest life and pensions company, with its own Irish unit, Canada Life.

"It allows us to achieve - with a single transaction - the leading position in life insurance, pensions and investment management," Great-West Lifeco chief executive Allen Loney said in a statement.

The Winnipeg-based company, which will fund the deal via an issuance of around $1.25 billion subscription receipts, said it would add approximately C$215 million ($212.90 million) or 10 percent to its consensus forecast earnings in 2014.

The sale, expected to close in July, will also help push the Irish government's debt to just below 120 percent of GDP this year from an estimate in December that it would peak above 121 percent, the country's finance ministry said.

It follows a 1 billion euro sale of debt in part-owned Bank of Ireland (BKIR.I: Quote) last month as the government begins to cut its exposure to the financial sector that it bailed out with 64 billion euros when a property crash ravaged the economy.

The deal provides Irish taxpayers with a full return on their investment in Irish Life, Finance Minister Michael Noonan said, adding that an additional dividend of 40 million euros would be paid to the state prior to completion.

"Today's investment by a company of their stature is a significant vote of confidence in the Irish economy and I am sure that this will lead to further investment," he said.

(Additional reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Erica Billingham)

 
Great-West Life Assurance Company and Great-West Lifeco Inc. President and Chief Executive Officer Allen Loney (R) greets people as they arrive at the annual meeting of shareholders and policyholders in Winnipeg, Manitoba May 6, 2010. REUTERS/Fred Greenslade