Aviva buys Friends First and bulks up

Irish Examiner - - Business - Ea­mon Quinn

Aviva Ire­land wants to in­crease its mar­ket share in pen­sions and life-as­sur­ance, hav­ing com­pleted a €130m ac­qui­si­tion of Friends First.

Friends First’s 250,000 cus­tomers will not be af­fected by the pur­chase, which will first re­quire the green light from reg­u­la­tors, Aviva said.

How­ever, the tie-up, which cre­ates a new life busi­ness con­trol­ling about 15% of the Ir­ish as­sur­ance mar­ket, will still be con­sid­er­ably smaller than mar­ket leader, Ir­ish Life — owned since the fi­nan­cial cri­sis by Canada’s Great-West Lifeco — and other firms, such as New Ire­land and Zurich.

Both Aviva and Friends First are large users of bro­kers to sell their prod­ucts. With 9% of the life mar­ket, Aviva ap­pears to be sig­nalling that it will want to grow again, ei­ther through ac­qui­si­tion or by tak­ing busi­ness from ri­vals in an ex­pand­ing mar­ket.

Ach­mea, the Dutch owner of Friends First, is now fo­cus­ing on gen­eral in­sur­ance and has moved away from life busi­ness.

Aviva also said that De­nis Kelle­her, who pre­vi­ously worked at New Ire­land, was join­ing Aviva, an ap­point­ment hailed as sig­nif­i­cant by a lead­ing in­dus­try ob­server.

“It is a mes­sage of in­tent”, said Michael Dowl­ing, chair of the mort­gage com­mit­tee at the Ir­ish Bro­kers’ As­so­ci­a­tion, of Aviva’s plans to grow ag­gres­sively.

He said Friends First is par­tic­u­larly dom­i­nant in the mar­ket for in­come-pro­tec­tion for so-called per­ma­nent health in­sur­ance, which is usu­ally bought by the self-em­ployed.

The deal se­cures for Aviva ac­cess to “a niche” prod­uct and an af­flu­ent mar­ket, Mr Dowl­ing said.

The ac­qui­si­tion also means Aviva has dis­pelled any doubts about its com­mit­ment to Ire­land, while leav­ing one fewer tar­get for KBC Bank, which has said, in the past, that it wants to cre­ate a com­bined Ir­ish bank and as­sur­ance busi­ness.

Dur­ing the depth of the euro debt cri­sis, Aviva ap­peared to come close to pulling out of the Repub­lic al­to­gether and of run­ning the busi­ness from Bri­tain.

Aviva Ire­land, which em­ploys 1,200 peo­ple, said the ac­qui­si­tion will bring to­gether the 320 staff at Friends First. It ex­pects to of­fer “a small” vol­un­tary re­dun­dancy scheme. Aviva Ire­land re­ported, in Au­gust, that op­er­at­ing profit across all its busi­ness in­creased 12% from a year ear­lier, to €48m.

It said, at the time, that it had seen a “sig­nif­i­cant growth in sales of re­tire­ment prod­ucts and bulk-pur­chase an­nu­ities”.

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