CGU pays pounds 344m for Hibernian to boost presence in Ireland

CGU, the insurance group, yesterday bought the Irish-based insurer Hibernian in a deal worth pounds 344m.

CGU, which already has close ties with Hibernian and owns 28 per cent of its shares, said it launched a full offer in order to benefit further from the booming Irish economy.

The buyer's small in-house Irish operation, CGU Ireland, is to be combined into the Hibernian business. Hibernian's brand and management will remain in place.

The deal will create the second biggest force in Irish general insurance market, which includes policies such as home and motor cover.

It will also be a large player in the life insurance and savings areas. Net premium income at the Hibernian group was pounds 267m last year.

The combined outfit will be Ireland's biggest composite insurer - meaning a company which sells both life and general insurance products.

Hibernian employs 1,000 in Ireland while CGU Ireland has 270. Some job losses are expected, especially at the two head offices, although they are likely to come from voluntary redundancies.

CGU's chief executive Bob Scott said: "The combination of these two successful businesses is expected to generate significant value for shareholders and benefits for customers."

The offer values Hibernian shares at Ir760p (633.3p) - nearly 61 per cent above its last trading price yesterday. It went unconditional last night, after major Hibernian shareholders Munich Re and Bank of Ireland accepted CGU bid.

CGU shares rose 20p to close at 959.5p.