Irish Life is involved in talks with the Belgian banking group Kredietbank on the future of the three companies jointly-owned by the two groups, Irish Intercontinental Bank (IIB), Irish Life Homeloans and the 48 per cent combined stake in the Hungarian bank, K&H. Irish Life owns 75 per cent of IIB and 50 per cent of Irish Life Homeloans.
Irish Life chief executive, Mr David Went emphasised that Irish Life and Kredietbank were "looking at all the options" in these discussions but added that following the merger with Irish Permanent, the merged Irish Life & Permanent would be a potential competitor to IIB in the Irish market.
Banking sources believe the most logical outcome would be for Irish Life & Permanent to sell the IIB, Irish Life Homeloans and K&H stakes to Kredietbank. Mr Went said that, of all the jointly-owned businesses, the 24 per cent stake in K&H in Hungary is most likely to be sold. "It doesn't fit our strategy," he stated.
Putting a value on these operations is difficult as Irish Life in its accounts includes all of its associates - including the one-third stake in Allianz Irish Life - together and does not separate the various associates.
Whatever about the relationship with Kredietbank, Irish Life has no intention of ending its relationship with Allianz through Allianz Irish Life, formerly AGF Irish Life until Allianz's takeover of the French group AGF. Mr Went said: "Allianz has been a breath of fresh air to the business. With the Irish Permanent branch network, we can sell a lot of general insurance business."
Mr Went confirmed that Irish Life was the only institutional backer of the management buyout (MBO) of Woodchester Investment Brokers from GE Capital and would have a majority equity stake in the company, which is one of the biggest broking firms in the State.
He emphasised, however, that the broker would be operated on an "arms-length basis" by Irish Life and that Woodchester would continue to sell general insurance from a range of companies, including Irish Life.
Woodchester is the largest broker to affinity groups and supplies a range of financial services to members of organisations such as the Irish Nurses' Organisation and the Irish National Teachers' Organisation. It is thought to have annual premium income of around £70 million (€88.9 million) and employs 100 people. The value of the MBO is thought to be in the order of £20 million.
Irish Life's merger partner, Irish Permanent, has declared its interest in bidding for ICC Bank. "A position in SMEs [small and medium enterprises] is not outside our strategic vision but the price has to provide value to our shareholders and not have an impact on our ratings or funding position," said Mr Went. Despite the weakness in its British and US operations, Mr Went said these remain part of Irish Life's core operations. Embedded value profits at the British operations fell from £12.2 million but this was largely due to once-off factors.
In the US, embedded value profits fell from £20.1 million to £17.4 million mainly due to the impact of low interest rates on the sale of annuities. "The US has delivered in the past, the management has demonstrated plans for each business to improve over the next few years," said Mr Went.
