Bar chart and line graph showing the top 10 Irish life insurers, 2009Bancassurer Irish Life and Permanent’s (IL&P) share
price paints a dismal picture of a company in dire straits.

From a high of €22.70 ($31.50) per
share in February 2007 it has collapsed to its current €0.15 per
share in the wake of Ireland’s devastating economic problems.

The final straw came in March 2011
when IL&P, together with all other Irish banks, underwent a
stress-test. Following the test, the Irish central bank declared
that IL&P would have to raise an additional €4bn to cover
potential additional losses.

In the wake of the stress-tests,
Ireland’s finance minister Michael Noonan announced a drastic
restructuring of the country’s banking sector that will ultimately
result in it two banks.

On IL&P specifically, Noonan
announced that the state will be required to provide additional
capital to the bancassurer to meet its capital requirements, with
the likely result that the state will emerge as its largest
shareholder. Following this, Noonan said IL&P’s non-banking
interest would be sold, including its life unit Irish Life
Assurance (Irish Life).

Irish Life, which ranks as
Ireland’s largest life insurer, has a market share of about 27%
and, despite Ireland’s economic woes, is profitable.

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In 2010, IL&P reported that
Irish Life had recorded an operating profit of €160m, an increase
of 57% compared with €102m in 2009.

Irish Life also has a good year in
terms of new business, with sales rising 6% compared with 2009 to
€572m on an annual premium equivalent basis.

Growth was driven by the insurer’s
investment management unit which attracted €2.5bn in new
assets.

However, other areas of the business remained under pressure.
Specifically, Irish Life noted that sales in the retail business
sector were down 8% on the back of weaker demand for pensions while
sales in corporate business sector were down 16% as a result of
flat salaries and reduced employee numbers in client companies.