Allied Irish Bank (AIB) and Irish Life are joining forces after the Irish bank halted its five-year joint venture with Aviva. The distribution partnership made AIB the sole distributor of products, including structured products, issued by Aviva Life Holdings Ireland's subsidiary Ark Life.
The partnership was ended after long negotiations in which AIB and Aviva were unable to come to an agreement regarding the commercial terms of the operation. The collapse of the relationship has been understood as a hard-hitting end result for Aviva in Ireland considering the joint business totalled about half of the insurers' life and pensions business.
The move has also been said to have been prompted by AIB's review of sales performances after noticing Irish Life had presented better performances through bank distribution than Aviva. The agreement between AIB and Irish Life has not been finalised, but it is understood AIB will be distributing Irish Life's structured products throughout their banks' branches in a few weeks' time.
According to SRP.com's database, AIB marketed 285 structured products issued by Ark Life during the last five years with an estimated sales value of €2.4bn. SRP.com data also shows that 219 products of the defunct joint venture are still live with maturity dates between 2012 and 2017, with an estimated volume of €1.6bn still to return to the market. AIB said the products' terms will not be affected by the changes and the bank will now have to buy Aviva's interest in the shared venture, which amounts to nearly 75% of it. According to the Irish Times the estimated buyout price will be €100m.