Bank of Ireland and AIB expected to run rule over Laya Healthcare

Bank of Ireland and AIB, the Republic’s two pillar banks, are expected to be among parties that will run the rule over Laya Healthcare, which has been put on the market for as much as €200 million, according to banking sources.

The process – which has yet to formally kick off – is also likely to attract interest from life and general insurance companies operating in the market, industry observers also said.

Bank of Ireland owns New Ireland, one of the largest life and pensions companies in the State, while AIB has recently set up a life and pensions joint venture with a unit of Canada’s Great-West Lifeco, parent of Irish Life, to re-enter that market.

Laya had a 27.6 per cent share of the Irish health insurance market last year, according to the Health Insurance Authority (HIA), equating to about 675,000 customers.

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VHI accounted for 48.4 per cent, while Irish Life Health had a 20.5 per cent slice of the market and the remaining 3.5 per cent was held by so-called restricted membership undertakings.

AIB previously held a 30 per cent interest in Aviva Health, before that business was acquired by Irish Life in 2016 and combined with the latter group’s GloHealth unit to form Irish Life Health.

The Irish Times reported last week that US insurance giant AIG had decided to put Cork-based Laya, which has about 600 employees up for sale, with industry sources estimating that the business is worth between €160 million and €200 million.

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AIG chief executive Peter Zaffino told analysts on earlier this month the group intended to sell Laya as it narrows the focus of its Corebridge Financial unit, in which the Irish company sits, to focus on life assurance and retirement products.

AIG spun off Corebridge through an initial public offering (IPO) and flotation on the New York Stock Exchange last year, but retains a 77 per cent stake in the company.

Spokesmen for Bank of Ireland and AIB declined to comment, while representatives for AIG and Corebridge did not respond to efforts to secure comment.

Industry sources said that corporate clients of Laya will be looking for a firm update on the sales process by the end of August, before a raft of company policies come up for renewal in September, one of the busiest periods of the year for this type of activity.

Almost 48 per cent of the Irish population has some form of health insurance at the end of last year, according to the HIA. That was down from a peak of 51 per cent in 2008, at the onset of the financial crisis, but ahead of the post-crash low of 44 per cent in 2014.

Laya traces its roots back to the formation of Bupa Ireland in 1997, which ended VHI’s monopoly on the State’s health insurance market. The business was bought in 2007 by Quinn Insurance and restructured as Laya after administrators were appointed to Quinn Insurance in 2010.

Laya was the subject of a management buyout in December 2011 with the support of an underwriter owned by Swiss Re, before AIG acquired the business in 2015 in a deal worth about €80 million.

In the area of health insurance Laya is a tied agent of Swiss Re’s Elips Insurance subsidiary, which underwrites coverage for the Irish company’s customers. Laya is also a tied agent of Swiss Re’s Iptiq unit for life insurance products.

Laya recorded €89.5 million of turnover in 2021, which was essentially made up of commissions for the sale of insurance coverage, according to its most recent set of accounts filed with the Companies Registration Office (CRO). That was up from €80 million for 2020.

The company, led by managing director Dónal Clancy, saw its pretax profit rise by 30 per cent to €28.9 million in 2021. It paid a total of €40 million in dividends to Corebridge between 2020 and 2021.