In a note to its investors yesterday, the AA confirmed that it is looking at selling its Irish business.
“The AA notes the recent press speculation regarding the potential disposal of its Irish business,” the note stated. “The AA confirms it is exploring options in regards to its Irish business and a further announcement will be made if and when appropriate.”
Cardinal Capital, a private equity firm, is reported to be in talks to buy the car insurance and breakdown services company, according to the Independent
. If Cardinal buys AA Ireland, the deal is likely to be worth more than €150 million.
The news came as AA Ireland unveiled plans to expand its insurance options. The company said it would offer new and existing customers mortgage insurance and life insurance, the Independent
“Entering the life insurance market was a fairly natural extension of the AA’s product suite,” said AA commercial director John Farrell. “With a large customer base slanted toward urban professionals, there is a strong reliance on AA products as they reach critical milestones such as buying a home or having kids.”
The company’s decision to expand into life insurance was made with the full backing of Cardinal, the Independent
reported. The insurance will be underwritten by Aviva
The private equity firm is believed to see AA Ireland as a way to bet on wider economic recovery; since care insurance is compulsory, consumers can’t just drop it if the economy tightens again. And AA’s breakdown services business is likely to do well in a tight economy as consumers delay buying new cars.