French insurance giant Axa has agreed to buy Laya Healthcare, the Republic’s second-largest health insurer, from a unit of US rival AIG, in a deal worth €650 million.
Laya has about a 28 per cent share of the Irish health insurance market, serving 690,000 members and generating about €800 million in premiums annually. The company is a tied agent that sells health and life products underwritten by units of Swiss Re.
Axa Ireland is a market leader in the provision of motor vehicle insurance, holding more than 30 per cent of the market. It is also an active player in the home, commercial, and farm lines of business. The organisation operates in the Republic of Ireland and Northern Ireland, employing more than 1,450 staff and has 34 branches.
The value of the deal is a multiple of a figure of up to €200 million that industry sources had expected Laya to fetch. That is because Axa ultimately plans to replace the Swiss Re units to underwrite Laya’s business itself.
The Irish Times first reported on May 12th that AIG chief executive Peter Zaffino had told analysts earlier that month that 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.
“This acquisition underlines Axa’s commitment to Ireland and fast-tracks our entry into the local and vibrant healthcare insurance sector,” said Marguerite Brosnan, chief executive of Axa in Ireland.
Almost 48 per cent of the Irish population has some form of health insurance at the end of last year, according to the Health Insurance Authority. 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.
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 business that counts private-equity giant Blackstone as its second largest investor with a 9.9 per cent holding.
Laya, led by managing director Dónal Clancy, 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.
Jim Daly, chief executive of the Private Hospitals Association, said Axa’s entrance into the Irish health insurance market was a “positive, disruptive development”.
[ Axa’s price tag for Laya based on ditching existing Swiss insurerOpens in new window ]
Dermot Goode, a healthcare benefits expert with Total Health Cover, said the good news for consumers was that there would continue to be three strong players in the health insurance market in the Republic.
However, the takeover will do little or nothing to protect consumers from the ongoing health insurance cost increases resulting from growth demand for healthcare and the rising expense of providing it, he said.
Laya increased its premiums by an average of 4.4 per cent earlier this year, marking a first rise in two years, as rivals Vhi and Irish Life also hiked costs. Irish Life has since raised its prices again, effective from last month.
