Committee Reports::Report No. 01 - Irish Life Assurance plc::02 February, 1988::Report

1.Irish Life Assurance plc (Irish Life) was incorporated on 15 March, 1939, to carry on the business of life assurance. The shares in the Company were originally held as follows:

2.In 1947, the Minister for Finance purchased the shares of the British life offices for £110,000. Since that time, there has been little change in the ownership of shares of this public company. The shares are currently held as follows:

3.Over the years, Irish Life has grown to be the largest life assurance company in Ireland, commanding a substantial share of the Irish market and with an increasing share of the market in Britain and Northern Ireland. At 31 December, 1986, it had total policyholders funds of IR32,194 million and shareholders funds amounting to IR£2.5 million.

4.The Company’s head office is located in Dublin. It has 13 district offices in Ireland and 11 branch offices in Britain served by a head office in London. The total number of people employed is 1,635 including 182 in Britain and Northern Ireland.

5.The Board of Irish Life comprises nine directors and a Chairman, all of whom are non-executive with the exception of the Managing Director. The Board is supported by several committees made up of Board members and company executives who implement the policies decided by the Board.

BACKGROUND

6.Irish Life was incorporated under the name “The Irish Assurance Company Limited”. In 1959 the Company changed its name to “Irish Life Assurance Company Limited”, and on 9 April, 1984, there was a further change of name to “Irish Life Assurance plc” in compliance with the Companies (Amendment) Act, 1983.

7.The Insurance Act, 1936, was introduced to regulate the insurance industry in Ireland. This Act made provision for the Minister for Industry and Commerce to approve any amalgamation of assurance companies and to subscribe for shares in any such amalgamated company.

8.The Insurance (Amendment) Act, 1938, gave statutory effect to an agreement made between four Irish assurance companies for the transfer of their life assurance and industrial assurance businesses to a single company to be named “The Industrial and Life Assurance Amalgamation Company, Limited” (the terminating company). The four companies involved in this agreement were -

At the same time, five British life offices amalgamated their Irish businesses with this company. The five British companies were -

9. The purpose of this new company was to take over and carry on the life assurance and industrial assurance business of these companies, and of any other company carrying on the assurance business in Ireland.

10.Two classes of shares, valued at two shillings (10p) each were issued by the terminating company - 2,000,000 “A” ordinary shares carrying no voting rights and ranking pari passu for dividend purposes with 100 “B” ordinary shares which carried all the voting rights. All the “B” ordinary shares were issued to the Minister for Finance. The “A” ordinary shares were issued to the various companies involved in the scheme in the proportion that the value of their net assets bore to the value of their liabilities. However, when a company’s liabilities exceeded its net assets, the Minister for Finance made good the deficit and received his proportionate number of “A” ordinary shares. The relevant proportion was applied to the value of the goodwill of each company to arrive at the final share entitlement. Arising from the above allocation, the “A” ordinary shares were issued as follows:-

Five British companies 72%

Five Irish companies 10%

Minister for Finance 18%

The Minister for Finance had to contribute a total of £1.05 million to cover the deficit.

11.It was agreed that the terminating company would continue in business until such time as it had transferred its business to a new company to be formed and named “The Irish Assurance Company Limited” (now Irish Life Assurance plc). The rationale behind this was that the terminating company would take over the existing business of the aforementioned companies and continue to trade until the amount of the deficit which was expected to arise on their existing life contracts was finally established. Until such time as the final deficit was established all new business would be taken on by Irish Life. The shares in Irish Life were to be held by the terminating company until it was wound up at which time the shares were to be distributed in proportions equivalent to the interests of the shareholders in the terminating company.

12.In 1945 it was agreed that the business of the terminating company would be transferred to Irish Life and that the terminating company be wound up. It was further agreed that the Minister for Finance would purchase the shares of the British companies in the terminating company (i.e. 72%) prior to the winding up. The Industrial and Life Assurance Amalgamation Company Limited (Acquisition of Shares) Act, 1947, empowered the Minister for Finance to purchase these shares at a price not exceeding three shillings (15p) per share. Subsequently, the Minister purchased the shares for the sum of IR£110,000, the terminating company was wound up and the shares in Irish Life issued to the shareholders in the terminating company pro rata. This resulted in the following distribution based on the revised shareholding:-

13.The principal objects of Irish Life as provided for in the Schedule to the 1938 Act include the following:

(a)Carrying on of life assurance business and/or industrial assurance business and/or sinking fund or capital redemption business (including any business ancillary thereto), but not the carrying on of any other class of assurance business,

(b)The undertaking under contracts with the Industrial and Life Assurance Amalgamation Company Limited and other assurance companies, of the servicing of the life assurance and industrial assurance and sinking fund or capital redemption contracts of such companies,

(c)The acquisition from this latter company of its life assurance and industrial assurance business or that of any other assurance company.

(i)The Irish Assurance Company Limited to have a share capital of £200,000 divided into IR £1 ordinary shares, with power to increase share capital,

(ii)The number of directors not to exceed nine, and the majority of the directors to be citizens of Ireland,

(iv)The Minister for Finance could hold any shares in the Irish Assurance Company for as long as he saw fit, or he could transfer all or any of his shares to a nominee, or he could sell all or any of his shares, and

(v)All dividends and other monies received by the said Minister in respect of any such shares, and also the net proceeds of all such shares sold by him, be paid into the Exchequer.

MEMORANDUM AND ARTICLES OF ASSOCIATION

(a) Memorandum of Association

16.The objects and powers of the Company as set down in the 1938 Act form the basis for the Memorandum of Association. Article 3 (1) of the Memorandum, which specifies the primary object of the Company, provides that apart from life assurance business, industrial assurance business and sinking fund or capital redemption business, the Company “shall not carry on any other class of assurance business”. The Company is also authorised (Article 3 (4)) to “amalgamate in any lawful manner with any other company carrying on any business which this Company is authorised to carry on”. However, Article 3 (7) authorises the Company to acquire or hold shares in “any company”. It would appear, therefore, that in so far as the Company does not actually amalgamate with a general insurance company, it can have an interest up to 100% in any company.

17.In 1977 the Memorandum of Association was amended by special resolution to authorise the company to promote, form or acquire a building society or societies and to subscribe for shares therein and to make loans thereto.

18.The other objects of the company are extremely wide ranging and enable it to do such things as give loans, purchase property and build property, make charitable donations, register the company in foreign countries and enter into agreements with foreign governments etc.

19.The liability of the members is limited. The share capital of the company, as set out in Article 3, is £500,000 divided into 100,000 ordinary shares of £5 each. The shares were originally issued as £5 shares with £2 paid in cash. In 1980, the balance of £3 payable on each share was paid up by way of capitalisation of general reserves of IR£300,000. At the same time, each £5 share was sub-divided into five shares of £1.

(b) Articles of Association

20.The Articles of Association are substantially the same as those in Table A of the Companies Act, 1963. The form of Articles adopted are those for a company not being a private company.

-Any person holding shares in the company is entitled to vote at any general meeting of the company, once he is the beneficial owner of the shares and a citizen of Ireland,

-Each director must hold shares in the capital of the company of the nominal value of £500. These shares are held in trust for the Minister for Finance,

-The articles relating to bonuses, dividends and reserves provide that the shareholders will be entitled to 2% of the surplus arising when the value of the company’s net asset is compared with the value of the liabilities to policyholders (i.e. 2% of the actuarial surplus). This percentage is subject to certain prescribed minima if surpluses in the two different branches of business do not exceed a fixed amount.

21.From the date of incorporation to 1972, the shareholders were entitled to 10% of the surplus but in that year, in return for a payment of £1,580,000, the shareholders agreed to a dilution of their entitlement. *The Joint Committee was informed by Irish Life that at that time, it appeared that with-profit insurance was becoming a dominant part of the business and that, in order to compete with other companies, it would be necessary to almost mutualise the company by reducing the profits attributable to the shareholders. The lump sum amount paid to the shareholders was calculated by an outside expert to reflect the reduction in their interest.

22.Additional information on certain of the Articles of Association is given in Appendix 1.

CORPORATE OBJECTIVES

23.The original corporate objective of Irish Life, as set out in its Memorandum of Association, was to carry on the business of life assurance. The context in which it was established was such that it was to act as a rescue agency for several firms which had got into difficulty in the 1930’s. That objective has now become irrelevant and the company has formulated a new corporate strategy. In its Annual Report for 1986 the company defines its business and objectives as follows:-

“The Company transacts group and individual pension business in the Republic of Ireland and life business in both the Republic of Ireland and the United Kingdom. There are 13 district offices located throughout the Republic of Ireland and 11 branch offices located in the United Kingdon. The Company employs over 1,600 people, with its Chief Office based in Dublin. As the largest life company in Ireland, Irish Life plays a major role in its service to, and support of, industry, commerce and private individuals. The Company is expanding rapidly in the United Kingdom and in 1986 established an office in the United States of America to search for opportunities in that market.

Through its subsidiary and affiliated companies, Irish Life also has interests in general insurance, building society operations and banking.

(i)to run a successful and profitable life assurance business, to maintain its position as the market leader in Ireland, and to expand overseas as rapidly as is financially and operationally feasible;

(ii)to provide a secure and an above average return to policyholders and shareholders;

(iii)to provide a first class service to clients;

(iv)to provide interesting and rewarding careers for staff;

(v)to expand the services the Company provides into areas compatible with its core business and to seek out new opportunities at home and abroad.”

PRODUCTS AND MARKETS

(a) Products:

24.Before discussing Irish Life’s performance over the years, it is useful to identify the various areas in which it operates and how business is generated. Premium income can be categorised as follows:-

(i) Individual Life and Individual Pension Policies

25.In each of these areas, premiums can be paid by way of single premiums (where one lump sum is paid) or annual premiums where payments are made at least once every year for a specified term (term insurance) or for life. Where individual life premiums are collected on a door-to-door basis at regular intervals, the business is classified as industrial business. The distinction between them is largely legal but is relevant in that collection costs for industrial premiums are extremely high in proportion to the premium income.

26.*The Joint Committee was informed by Irish Life that, while enormous growth in industrial business was not anticipated, the Company did not intend withdrawing from this area because -

(a)Quite a high proportion of the Irish population do not have bank accounts and industrial assurance policies are the only way they can save, and

(b)The company has 500 staff employed in the industrial assurance section of the business.

(c)With-Profit - Guaranteed return plus a percentage of the annual surplus earned by the company. This percentage is decided by the directors at their discretion.

(ii) Group Pensions:

27.In this sector, premiums can be paid on a monthly or annual basis and benefits can be linked to fund performance or, in the case of with-profit pensions, to the overall performance of the assurance company.

(b) Markets

28.Irish Life operates in Ireland and the United Kingdom. The full range of products is sold in all sectors on the Irish market while sales in the UK are confined to life and pension (ordinary branch only). The following table gives an indication of the size of the Company’s market in both countries:

HISTORICAL SALES PERFORMANCE

29.The most useful way to assess the growth of Irish Life is by reviewing the figures for new business written over a period. The information given in Appendix 2-(i) is based on data extracted from the Blue Book and shows relevant figures for all companies operating in the Irish market. The information can be summarised as follows:-

30.According to Irish Life the single premium market is highly volatile and is significantly less important from the Company’s point of view than the stable annual premium market. The reduction in the Company’s share of the single premium market in recent years is due principally to the following factors:

(a)The arrival of new companies on the Irish market which place particular emphasis on single premium business; and

(b)Certain banks have connections with life companies and are actively involved in guiding funds towards their associated life companies.

31.A table showing the annualised growth of the various unit linked funds in the Irish market in the period up to January 1988 is included in Appendix 2-(ii). It is apparent from this Table that over the last five years Irish Life’s Managed Equity and Property funds grew at a lower than average rate, while the Irish Life Cash and Gilt funds grew at a rate in excess of the average for similar funds.

“The position of Irish Life funds in the different performance surveys varies from time to time, but they have consistently been in the upper quartile on a category by category basis. No great significance should be given to the position in any single survey which may be distorted by price timing differences. For instance, some funds price weekly or monthly and the investment activity in the last week in December would not be reflected in the figures. Consistency over time is the hallmark of successful operations - Irish Life’s funds match up very well in this regard. Some specific comments on the particular table are;

(i)Performance of Personal Portfolio funds since launch in October 1986 are market leaders.

(ii)Performance of Gilt and Cash funds over five years are above average.

(iii)Property performance has been in line with the actual behaviours of the commercial property market. Many of the property funds in the survey are invested primarily in Cash and Gilts and comparisons are therefore invalid”.

32.In a review of life assurance savings plans by Guinness & Mahon (Survey of Life Assurance Savings Plans - October, 1987) covering unit linked funds and with-profit endowment funds, Irish Life’s results were given as follows:-

BASIS OF ACCOUNTING AND ACCOUNTING POLICIES

Revenue Accounts:

34.These accounts indicate the total premium income, whether recurring premiums or single premiums, received and receivable during the financial year. To this income is added the total income from investments received by way of dividend based on the proportion of funds held by the Company on behalf of the relevant branch. In other words, if, on average during the year, 90% of funds related to the ordinary branch, 7% of funds to the industrial branch, and 3% of funds to the shareholders, the total investment income for that year would be apportioned between them on that basis.

35.From the total income derived above, claims paid out, commissions paid and expenses of management are deducted. Taxation is then provided for, tax being levied on the excess of income over expenditure on all business with the exception of all pension fund income and capital gains. Unrealised gains are not taxed. Additional amounts are then deducted for Government duties and levies. The sum of the claims, commissions, expenses, duties and taxes amount to the total “outgo” and, when deducted from total income, give the excess of income over outgo.

36.Three adjustments are made to this latter amount before arriving at the total addition to funds for the year, which amount is all attributable to policy holders. These three adjustments are as follows:-

(a) Shareholders’ Share Of Surplus:

This charge represents 2% of the amount by which the Company’s net assets exceeds the amount of its liabilities to policyholders as computed by the actuary. This “surplus” bears no relationship to the excess of income over outgo shown in the Revenue Account and is not disclosed in the accounts but rather in the Directors Report where the results of the actuarial valuations are stated. Under the Articles of Association the shareholders are allocated 2% of such surplus subject to certain minima. This amount is transferred out of the Revenue Account to the Profit and Loss Account where the shareholders interest is dealt with.

(b) Capital Appreciation/ (Depreciation) / Linked Business:

This amount represents the appreciation or depreciation during the year on unit linked funds and has to be added to or deducted from the excess of income over outgo so as to ensure that the change in market values of assets held in unit linked funds is credited to or deducted from policyholders.

This represents the amount of capital appreciation on non-linked investments which is required to be allocated to policyholders to cover any shortfall between the value of the policyholders funds and the liabilities to policyholders (including the amounts due by way of bonuses for the current year). Such a shortfall can arise when the return on non-linked investments has not been received by way of dividends or rents, but by way of capital gains, whether realised or not, which are credited to Investment and Revaluation Reserve.

37.After these three adjustments, the total addition to the fund for the year is arrived at in both the ordinary branch and the industrial branch. One final adjustment is made in the ordinary branch to reflect the exchange differences arising on assets and liabilities denominated in foreign currency.

38.The “bottom line” in each of the revenue accounts represents the total of the fund attributable to policyholders at the end of the year. This amount is equivalent to the total liabilities as determined by the actuary at the year end plus the share of the surplus attributable to policyholders for that year.

Profit and Loss Account:

39.The profit and loss account deals with the shareholders share of surplus after taxation from life assurance business and industrial assurance business as computed in the Revenue Account. This is added to the proportion of investment income apportioned to the shareholders, based on the mean funds attributable to them throughout the year. This investment income is subject to taxation in the profit and loss account and the sum of the shareholders share of surplus and the investment income, after tax, gives the total profit after taxation. Dividends, paid and proposed, are deducted from this amount to give the total profit retained for the year.

Balance Sheet:

40.The Company’s balance sheet consists mainly of investments, comprising mortgages and loans, government gilts, equities, properties, and investments related to linked business, the total of which is reduced by deduction of loans in respect of overseas investments. To the net total investments is added the fixtures and fittings of the company. The Company’s offices are included in property investments.

41.The Company’s current assets are represented by premiums, dividends, rents, and interest receivable plus cash and bank balances. Current liabilities represent outstanding claims, proposed dividends and sundry creditors. Investments, fixtures and net current assets are added to give the balance sheet total, which is represented by:

-shareholders funds, comprising share capital, general reserves and the balance of the profit and loss account,

-investment and revaluation reserve (representing unrealised appreciation and depreciation of non-linked investments, adjusted for profits and losses on realisation of investments, taxes thereon and exchange adjustments which relate to non-linked business, and transfers to revenue accounts), and

(b)No rent is included as receivable/payable on the properties owned and occupied by the Company, but its inclusion would have no effect on the final surplus as such adjustments would be “self cancelling”. There is not an agreed policy in the industry in regard to the treatment of this item;

(c)Results of subsidiaries and associated companies are excluded from the accounts except to the extent that dividends have been received. The reason for this is that, in the opinion of the directors, consolidation of subsidiaries or inclusion of the results of associates would be misleading in the context of the Company’s overall performance. This is one of the acceptable reasons for non-disclosure as set out in Section 150 of the Companies Act, 1963. However, the Joint Committee believes that, at least in the case of Church and General Insurance plc, its separate accounts should be distributed with the Company’s accounts;

(d)Prior to 1986, investments held in respect of non-linked business were shown in the balance sheet at cost less investment reserve. The investment reserve was made up of both realised and unrealised profits on investments held by the general fund (i.e. non-linked business). This reserve built up over the years and was reduced by the write down of investments or when transfers were made, on the actuary’s advice, to the revenue accounts. This policy meant that capital profits and losses on assets held at cost in the balance sheet were not dealt with in the accounts except to the extent that the actuary decided that such profits were required to cover any shortfall between the values of the net assets and the liabilities to policyholders.

43.This policy is in accordance with the Companies Act, 1963, which exempts insurance companies, within the meaning of the Insurance Acts 1909-1961, from disclosing such reserves. The reason for the exemption is the nature of the investment market where any downturn in reserves, if reflected in the accounts, could create a confidence problem among investors.

44.In 1986, following a request from the Department of Industry and Commerce to all assurance companies, Irish Life adopted a change in accounting policies with the result that -

(i)Investments held in respect of non-linked business are stated in its 31 December, 1986, balance sheet at market value; and

(ii)The investment and revaluation reserve arising on this change in accounting policy is shown in the 31 December, 1986, balance sheet at IR260 million (1985 - IR£241 million).

45.In 1972 when IR£1.58 million was paid to the shareholders in return for a dilution of their rights, the payment was appropriated from the investment reserve. *The Joint Committee was informed by Irish Life that this reserve is distributable to the shareholders on a winding up in accordance with the Memorandum of Association. The directors consider, however, that the reserve is required, at least in part, to fund the Company’s operations and to allow for future termination bonuses payable to policyholders. It is apparent, however, that if the capital structure of the company was to be altered, a substantial part of these reserves could be distributed to shareholders.

46.*Irish Life informed the Joint Committee that some preliminary work had been done on resolving the question of access to the earnings stream arising from the Investment and Revaluation Reserve, but there are legal, actuarial, equity and other questions which have not yet been resolved.

PROFITABILITY

(a)It is almost a mutual company, in that 98% of the surplus accrues to the policyholders; and

(b)As a significant protion of the Company’s investments were, until 1986, held at cost in the Company’s balance sheet, it is not possible to fully assess the overall investment performance in regard to the assets held, as movements in the investment and revaluation reserves of other life companies competing on the Irish market are not detailed in the Blue Book for 1986.

48.The Joint Committee is limited to measuring the return on average funds employed based on gross dividend and rental income received and capital appreciation on linked business. Appendix 2-(iii) gives details of the return on dividend and rental income plus capital appreciation on linked business as a percentage of average funds invested during the year, excluding industrial assurance.

49.The return has been computed before taking account of commissions or management expenses, as commissions tend to relate in the main to new business and management expenses cannot be apportioned between those required to service existing policies and those relating to getting new business.

50.From the shareholders point of view, profitability can be measured by comparing the total profit after tax attributable to the shareholders average investment in the Company by way of share capital, general reserves and retained profits. A summary of this information for the years 1981 - 1986, inclusive, is given in Appendix 2-(iv).

51.In examining the financial statements in more detail, trends in the level of commissions and expenses are apparent. These items can also be compared with the experience of competitors as set out in the Blue Book.

Claims

52.Amounts shown under this heading include policies maturing, policies surrendered and bonuses declared. Any comparison of the claims experience of different companies is largely invalid as the surrenders paid out are more a function of the prevailing tax regime and economic environment. In addition, there is no direct relationship between claims paid out and premium income.

Commissions

53.Commission payments are mainly comprised of commission on initial premiums. The premium income with which commissions are compared contains a mix of business, including individual life, group pension and single premium, each of which contains a very different commission structure. The commission costs associated with single premium policies are significantly less than those attaching to annual premium policies. This is a particular problem area in the case of any insurance company in Ireland as it is essential to compete with other insurance companies on the level of commissions paid so as to ensure that sales are maintained.

54.Most of the large Irish insurance companies have an agreement with regard to the levels of commissions payable on the various types of policies but some companies operating in Ireland are not party to this agreement and regularly pay higher commissions. The Insurance Bill, 1987, proposes to give authority to the Minister for Industry and Commerce to require a reduction in the rates of commission payments to specified levels where, in his opinion, the existing rates are excessive and should prevent any further upward trend in commission rates which at present, on annual premiums, can amount to in excess of 90% of the first year’s premium.

55.From an examination of the data included in Appendix 2-(v) it is apparent that where business outside Ireland is concerned, commissions as a percentage of premium income are substantially higher than those paid in Ireland. *The Joint Committee was informed by Irish Life that in Ireland the Company sells a very large amount of group pensions and single premium business both of which have very low rates of commission. Most of the Company’s business in the U.K. is regular premium individual life assurance and individual pensions, which is the area where commissions are highest. The rates of commission are not really different in the UK - the mix of business is different.

56.For ordinary business within Ireland, commission as a percentage of premium is generally lower than that of the industry total while it is in excess of that for the Insurance Corporation of Ireland (Life). The explanation for this is that single premium policies form a very high portion of that company’s business.

57.In the case of the industrial branch, commissions as a percentage of premiums in Irish Life have generally stayed around the average for Irish companies. They have also been substantially less than the average commission for non-Irish companies, but it is better to look at commission and management expenses jointly when comparing with non-Irish companies, as the apportionment may differ and management charges from abroad may distort the picture.

Management expenses

58.It is apparent from Appendix 2-(vi) that management expenses in Irish Life have gradually increased over the years to their present level of 11.1% for the ordinary branch in Ireland. The company considers that this increase results from a steady increase in costs, an increase in the level of service to customers, and the additional charges for government levies and stamp duties imposed in recent years.

59.Within the industrial branch, management expenses account for a substantially higher percentage of premium income (approximately 50%). This is a reflection of the nature of the market and the collection procedures involved. Irish Life’s experience in this area is substantially the same as that of Irish companies generally, but the percentage expenses was almost three times that of non-Irish controlled companies in 1986.

60.In the U.K. market, management expenses have grown over the years to account for some 18.9% of premiums in 1984, but this was reduced to 16.2% in 1986.

CAPITAL STRUCTURE AND DIVIDEND POLICY

61.The Company’s capital structure differs from that of a normal trading company in that the assets are funded almost entirely out of policyholders funds. Consequently, the size of the Company’s share capital and retained profits is almost irrelevant at 0.12% of policyholders funds. The relationship between shareholders funds (including share capital, general reserves and retained profits) and total funds (policyholders and shareholders) is outlined below:

It is apparent from these figures that the shareholders interest is steadily declining, while their share in the actuarial surplus remains at a constant 2%. In fact, since 1972, when the shareholders interest was reduced from 10% to 2%, the shareholders overall interest in total funds has dropped by two thirds (from 0.35% to 0.12%).

62.Appendix 2-(vii) shows that total dividends of IR£2,002,316 have been paid to the Minister for Finance in the period since dividends were first paid in 1956 to 31 December, 1986. The amount of the dividend paid is agreed by the directors in consultation with the Minister for Finance. However, the entire profits attributable to the shareholders could be distributed each year; the undistributed portion of these at 31 December, 1986, was IR£1.59 million.

ORGANISATIONAL STRUCTURE AND INDUSTRIAL RELATIONS

Employment Levels

63.The total number of people employed by Irish Life at 31 December, 1986, was 1,635, analysed as follows:

64.The total numbers have fluctuated significantly over the years. When the company was formed the total number employed was almost 3,500, most of whom came from the companies which amalgamated. By 1960, this number had dropped to 1,300. Since then, as business expanded, the numbers employed have been increasing. No substantial increase in the number employed is expected in Ireland over the coming years, but some increase is expected in the U.K. as the field staff is being built up to handle more direct sales. At present, most of the U.K. field staff act as broker inspectors rather than direct sales.

Staff Recruitment

65.In the main, staff are recruited directly from schools or third level institutions. It is the Company’s policy to train people within the Company so that senior posts can be filled from within. In exceptional cases, experienced people are recruited externally, having first advertised internally, and after consultation with the union. Head Office staff are recruited by national advertising while field staff are generally recruited by the district manager who advertises in local newspapers.

66.Staff turnover currently stands at about 7% per annum. In the years 1978 and 1979, however, turnover rates reached as high as 25%, arising from a major expansion in both the Public Service and the financial services industry. This resulted in an outflow of staff from Irish Life to what were perceived to be more attractive employment opportunities.

Staff Remuneration

Administration Staff

67.Each year, negotiations take place with the union to agree on wage levels and increases. The increase is agreed after giving consideration to the following matters:

(b)The rate of pay and the percentage increases agreed by a collection of 12 semi-State and private sector companies.

Managerial salaries are reviewed annually by the Personnel Committee of the Board, and the Public Service guidelines are taken into account at these reviews.

Field Staff

68.Field staff are paid a basic annual salary plus commissions Each year, field staff get two increases:-

Field staff are also paid an annual expense allowance (known as their “Debit”) based on the size of the sector of industrial business which they have to service. All field staff do some industrial business. The commissions paid to field staff depend on whether the policy is industrial or ordinary and also on the type of policy sold.

Trade Unions and Industrial Relations

69.The Association of Scientific, Technical and Managerial Staffs is the principal union in Irish Life with approximately 90% of staff being members. This union also deals with the staff in the U.K. Some of the field staff in Ireland are members of the I.T.G.W.U. While in the past some difficulties were experienced in dealing with unions, it is understood that relations are now considered good.

Policy Making and Implementation

70.The Board of Irish Life is responsible for making all policy decisions. The Board members are appointed by the shareholders and are drawn from a broad spectrum of business backgrounds. While moves were made in the 1970’s to have worker directors, there are no worker directors on the Board of Irish Life.

71.The Company’s operations are directed by three committees responsible for (a) investment policy, (b) personnel, and (c) audit. The Managing Director sits on all three committees and, thereby, keeps in close contact with all the company’s activities. Decisions are implemented and supervised by the various levels of management.

72.The Company has arranged two major “Organisational Development Programmes” which involve large numbers of senior and managerial staff in seminars where policies and issues are discussed. The output of these discussions has been considered by the Board and included, where appropriate, in the corporate plan. The corporate plan is not formally submitted to the Minister for Finance. Irish Life does, however, in various meetings with the Minister for Finance and with senior officials of his Department, brief them in regard to the Company’s corporate plan.

CORPORATE POLICY

(A) INVESTMENT

73.Broad investment policy is decided by the Board and then implemented through the Investment Committee. The Investment Committee meets every six weeks and it reviews Board policy and company performance in the light of the investment policy paper which is drafted in the beginning of each year. In addition to these meetings, quarterly reviews of investment performance of managers takes place. A sub-committee to the investment committee, known as the Property Portfolio and Investment Committee, meets monthly to discuss property aspects of investments.

74.Below committee level there are monthly meetings of all the managers in the Investment Department at which specific decisions are made as to the assets to invest in. To a large extent, investment decisions are dependent on the type of fund to which the investment relates. Broadly speaking, there are two funds as follows:-

(a) General Fund

This area incorporates all non-profit business, pensions, insured business and guaranteed income bonds and accounts for approximately 30% of the annual cash flow of Irish Life. Due to the fact that, in part, income on these funds is being guaranteed at a fixed level, a very high element of the amount available is invested in fixed interest securities (39.8% at December, 1986 - See Appendix 2-(viii)). The balance of the fund can then be invested as the department sees fit with the overall objective of achieving the best return over a 3 to 5 year period. It is possible within this fund to take a longer term view, as short term performance is not a major factor. It is in this sector that investments can be made in unquoted companies.

(b) Unit Linked Funds

At present, all pension business is channelled through unit linked funds. Approximately 75% of the funds controlled by Irish Life in this area are fully discretionary as far as management is concerned. In the remaining 25% the wishes of the trustees of the individual pension schemes have to be complied with.

As it is the unit linked funds which have received most attention from pension fund managers and the media, more and more emphasis is being placed on the short term returns on these funds. The main competitors of Irish Life in this area are the merchant banks.

Overseas Investment

75.As a result of the exchange control regulations introduced in 1978, Irish Life can invest only 10% of its cash flow from Irish operations overseas, but it would be extremely difficult to quantify the effect of this restriction. Any assets held overseas at the time of the introduction of exchange control can remain overseas and the dividends and proceeds of any sale may be reinvested overseas. The major difficulty arising from this, from the point of view of Irish Life, is that the Irish equity market is extremely small in comparison to the assets of Irish assurance companies and Irish Life in particular. On the other hand, it is necessary for Irish Life to match their assets with their liabilities from a currency point of view and, consequently, it is curtailed from undertaking major overseas investment. *The Joint Committee was advised by Irish Life that before the introduction of exchange control the company invested less than 20% outside of Ireland and allowing for borrowing etc. the current figure would not be very dissimilar. It was unlikely that the company would go anywhere beyond that because of the following:

(i)If what is owed to policy holders is Irish pounds, the Company from a pure economic point of view could not sensibly mismatch currencies to any very marked degree;

(ii)Supervisory rules demand localisation of assets. Quite apart from exchange control the company would be forced to invest a large proportion of its funds in Ireland; and

(iii)It would not be sensible to invest a large proportion of the company’s funds abroad - the people who save with the company expect it to put the money back into the country.

Property Investment

76.In the 1970’s about 30% of Irish Life’s assets were held in property but now this percentage has dropped to 10.5%. Lack of reasonably accurate data in relation to the overall valuation of the Irish property market makes it impossible to compare the total value of properties of IR£259 million held by Irish Life with the overall market. Due to current difficulties in the property market it is likely that there will be no substantial increase in property investment in the forseeable future.

Investment in Subsidiaries

77.A schedule of investments in subsidiary and associated companies as at 31 December, 1986, is included in note 15 to the accounts for the company. It is clear from a review of these investments that the majority relate to property companies which were formed to take the title to properties while they were being developed so as to enable tighter control to be exercised over the development itself or, in some cases, to facilitate joint venture operations. Property subsidiaries are also established in cases where there are taxation considerations involved, particularly when the property is overseas, or where the property is let or to be let to several tenants which will involve the Company in charging service fees and in reviewing rents with several parties. In general, however, once a property is developed it will be transferred back to Irish Life and the holding company will be liquidated.

78.The non-property and investment subsidiary and associated companies are as follows:-

(a) Church & General Insurance plc.

Irish Life acquired a 63.6% interest in Church & General during 1985. This investment gave Irish Life an outlet in the general insurance market which complemented their business. At the time Irish Life felt that their field staff could also generate sales in general insurance. Church & General has been trading in a difficult market and while it has made profits in the last four years, it has also shown underwriting losses in those years. Irish Life is represented on the Board of the company.

(b) Irish Life Building Society

One investment, not shown in note 15 to the Irish Life accounts, is the Irish Life Building Society, a mutual society effectively controlled by Irish Life. The investment in this company is included in the equity investment section of the balance sheet. This “promotion” by the insurance company was important in that it enabled Irish Life to discontinue its mortgage business which was not an attractive form of investment for a life company, while at the same time providing an alternative pool of investment to satisfy the needs of house buyers.

It also put Irish Life in a position where it could recommend customers who had encashed their policies to invest their funds in a building society which would consider the interests of Irish Life as a whole. It is understood, however, that no financial benefit accrues to Irish Life from this investment over and above the interest it receives on its deposits with the society.

The Company’s initial investment in Irish Life Building Society was in the form of IR£100,000 deposited with the Registrar of Building Societies. The Company has ongoing cash deposits with the Irish Life Building Society which are at a level compatible with the Irish Life policy on asset mix.

Irish Life originally acquired 25% of this company during 1973 through its investment in Dunkeld Ltd., the holding company for the Braids Group. While its investment in the latter group was unprofitable, it is understood that it was more than compensated for by its holding in Irish Intercontinental Bank which is a rapidly growing and profitable bank.

(d) United Dominions Trust Bank Ltd.

Irish Life acquired 25% of United Dominions Trust Bank Ltd. during 1971 when the U.K. shareholders offered them a stake as they wanted an Irish shareholder. The following statement is made by the Chairman of Irish Life in the company’s Annual Report 1985:

“UDT Bank has suffered from rising bad debts experienced in the consumer market. Steps have been taken to correct the problems and the company is now trading profitably”.

Despite the significant write offs U.D.T. still made a profit in 1985 and in the Irish Life Annual Report, 1986, the Chairman states that “UDT bank under new management has greatly improved its position and is now trading satisfactorily”.

79.Irish Life considers both Irish Intercontinental Bank and United Dominions Trust Bank Ltd. as investments having a potential spin-off in that they give the Company an opportunity to get into the banking market if it decides to actively develop in this area.

80.The Joint Committee understands that the Company has no strong inclination at this time to get involved in banking, as it sees its core business as directly concerned with long term investment and savings. Irish Life would, however, wish to retain the option of getting involved in banking to enable the Company to respond to significant changes in the market place, if such could be achieved on a basis compatible with the existing business.

(B) FOREIGN EXPANSION

81.The Joint Committee understands that the main reasons for the company’s embarking on foreign expansion are as follows:

(a)Surpluses available to policyholders can increase to the extent that assets invested in foreign countries, which are not tied to unit linked funds, can create free reserves which go into the pool of reserves available for policyholders and shareholders both in Ireland and in the foreign country. This is particularly important where higher returns can be achieved on assets invested in the foreign country;

(b)Unit linked business can produce a return of 2% to 3% of the capital sum invested by way of management fees charged to policyholders. This profit accrues to all the policyholders and shareholders;

(c)By expanding the market, larger surpluses can be achieved, 2% of which will accrue to the shareholders;

(d)Economies of scale can be achieved where head office resources in Ireland, including staff and computer technology, can be utilised by the subsidiary/branch office, enabling the same overhead to be shared across a bigger fund;

(e)Security and prospects for employees of Irish Life are provided by such expansion as, in the event of any drop in the Irish market, people can be redeployed on foreign business, particularly where the foreign market is expanding;

(f)To remain located in Ireland with such a substantial share in the Irish market and with competition from abroad where the foreign company can subsidise their Irish branch through reduced management expenses or, alternatively, by way of higher surpluses earned on worldwide assets, could spell disaster for Irish Life’s share of the market. To compete on a “level pitch” Irish Life must strive to have a foreign base where worldwide markets can be tapped from an investment point of view and where the overall size of the fund can be expanded to give it more strength when competing.

82.In the last 5 years, Irish Life has spent in excess of IR£6 million on computer hardware, giving it one of the largest and most sophisticated computer installations in Ireland. Most of the company’s software is developed internally and substantial investment has also been made in this area. The depreciation policy for hardware and software provides for write off of the investment over 5 years.

(iv) Services supplied to the Company

(a) Reassurance:

The company has strict policies with regard to the level at which any risk requires to be passed on to a reassurance company. Generally speaking, any risk in excess of IR£250,000 on any individual will be passed on. Most of these risks are reinsured with foreign companies with which Irish Life has a long standing relationship and where agreements have been entered into with regard to the sharing of risk.

(b) Tendering for Building Contracts:

By and large, any property development by Irish Life tends to be so big that only the largest Irish construction companies can be considered. As a result, tenders are usually requested by invitation to a select number of construction companies. To date, only Irish companies have been asked to tender for such projects.

While Irish Life is authorised by its Memorandum and Articles to carry on the business of a stockbroker, it has never acted as such. The Company endeavours to spread its business between the major stockbroking firms in Ireland. The Company considers that the investment analysis services supplied to it by independent stockbroking firms is extremely useful and if it were to become involved in stockbroking it could jeopardise the availability of this analysis.

CURRENT PROBLEMS AND POTENTIAL PROBLEMS

(a) Capital re-organisation

84.It would appear that the present capital structure is no longer compatible with the Company’s business in that the tendency has been towards writing more unit linked policies than with-profit policies. As with-profit policies are the Company’s main source of “equity”, Irish Life has to place more and more reliance on its investment reserves to fund its operations, solvency margin and expansion plans.

85.This is a highly complex area and the Joint Committee understands that the Company is reviewing the capital structure in an effort to determine the most appropriate structure for the future. The role of the investment and revaluation reserve in facilitating any capital reorganisation is unclear but it would appear that if, for example, the company went public, some or all of the capital reserve could be available to existing shareholders prior to a flotation. This area is further expanded on in the Chapter on Privatisation.

(b) Foreign Expansion

86.Following an evaluation of the assurance market in the USA, Irish Life set up an office there in 1986. In November, 1987 the Company announced its intention to acquire The Midwestern United Life Assurance Co. in the United States at a cost of IR£62.5m. Irish Life withdrew from the proposed acquisition in December, 1987, but the Company believes that acceptable alternative acquisitions will be available.

87.The Joint Committee was informed by Irish Life that 31 of the 50 States in the USA have legal objections to government controlled companies operating within their jurisdiction. Irish Life appears to have found a short term solution to the problem which is dealt with in more detail in the Chapter on Privatisation.

88.The Joint Committee was informed by Irish Life that discussions had taken place between the life offices and the Department of Industry and Commerce with a view to making better provision for supervision of the life assurance business.

89.Initially, it was suggested that an intermediate supervisory body be established and funded jointly by the Department and the life offices to oversee the industry in Ireland. It is understood, however, that the present intention of the Department is to employ full time actuaries so as to enable it to carry out its function in a more efficient and timely manner.

90.While the actuaries employed by life assurance companies have an independent basis, it would appear essential for their independence to be overseen by a body with the expertise required to monitor such independence.

(d) Subsidiary and Associated Companies

91.In the case of companies where Irish Life holds a substantial share, particularly where such companies are publicly quoted, Irish Life has a difficulty in deciding whether or not it should have board representation which would enable it to influence the companies’ activities. At present, Irish Life is only represented on the board of its subsidiaries and in other companies where it holds more than 20%. Irish Life does not seek board representation in other investments as it would make it difficult for it to deal in that company’s shares and it could also be put under pressure to assist such companies if they encountered financial difficulties.

(e) Regulation of Insurance Brokers

92.The Committee of Inquiry into the Insurance Industry (1976) recommended that the financial relationship between insurance brokers and insurance companies be disclosed to proposers for policies and that the consumer be protected from misleading advertising. The Insurance Bill, 1987, proposes to give the Minister for Industry and Commerce power to prescribe codes of conduct to be observed by insurance brokers and agents in the State in regard to their dealing with third parties.

PRIVATISATION

93.The Joint Committee understands that Irish Life is reviewing the present capital structure as it is believed that the present structure is no longer compatible with the Company’s business. As mentioned previously, Irish Life has to place increasing reliance on its investment and revaluation reserve to fund its operations, solvency margins and expansion plans.

Investment and Revaluation Reserve

94.This account represents the unrealised appreciation and depreciation of non-linked investments adjusted for profits and losses on realisation of investments, taxes thereon, exchange adjustments which relate to non-linked business, and transfer to the revenue accounts.

95.*The Joint Committee was advised by Irish Life that the assets underlying the investment and revaluation reserve are part of the life fund and as such (under the current Articles of Association of the Company) they are potentially available for policy holders or for shareholders. The Articles of Irish Life state that to the extent that the Company distributes money to its with-profit policy holders, the shareholders must get 2% of such distribution. Under the Company’s Articles the with-profit policy holders have a “perceived” right to 98% of all the surplus it is chosen to declare for policy holders and shareholders.

96.A change in this basis of apportionment would not be as simple as changing the Articles (which would require shareholder approval) as such a change would redefine rights. The Company could not remain at the hazard of future Court actions. It was envisaged that there would be a scheme of arrangement both here and in the United Kingdom (as the majority of the Company’s with-profit policy holders are, in fact, United Kingdom residents) and the question would have to be settled in both jurisdictions.

97.The Joint Committee was informed that the apportionment of the dividend stream arising from the investment and revaluation reserve to the with-profit policyholders could, for the purposes of an application to the Courts for the ruling referred to above, be determined by reference to the average with profit policyholders funds employed during the period within which the reserve arose and the investment returns obtained thereon as compared with the overall shareholders funds employed in the same period.

98.This change would not result in any immediate increase in dividend to existing shareholders as the Company would need to continue its existing policy of augmenting the reserve (which is treated by the Company as a permanent capital base) it needs to maintain for the following purposes:

(i)to meet the supervisory solvency standards;

(ii)to pay future bonuses;

(iii)to finance new business requiring capital investment in the early years; and

(iv)to cover fluctuations in the values of investments held.

99.Irish Life envisage, however, that should the Company obtain a quotation for its shares on the Stock Exchange, it would not need to retain such a high proportion of the revenues earned on the assets underlying the investment and valuation reserve to meet its on-going capital requirements as it would have access to its shareholders through rights issues etc. for development of capital and would, consequently, be in a position to apply an increased portion of the revenues arising in the form of dividends.

100.Major advantages arising from privatisation may be considered under the following headings:

(i)United States Market,

(ii)Funds for Growth, and

(iii)Existing Shareholders.

(i) United States Market

101.*When the Company gave oral evidence to the former Joint Committee in July, 1986 it advised that about half of the States in the U.S.A. had an objection to companies owned by other Governments, that this might well be an inhibition on the Company’s expansion in the U.S., and that the Company was “not really far enough down that road to say too much about it”. However, in the course of the subsequent hearing of oral evidence by the present Joint Committee in October, 1987 the Company disclosed that it had established an office in the U.S., that a French company was using a procedure called a “voting trust”, of which the majority of the trustees were U.S. citizens, to hold an American company, and that this procedure might be a short term solution to the Company’s problem of expanding into the U.S.

(ii) Funds for Growth

102.Irish Life is currently dependent on its investment and revaluation reserve (IR£260 million at December, 1986, less supervisory solvency requirement of IR£65 million) as a source of funding for its expansion. The projected extent of the Company’s development plans and their cost is not known and it is, therefore, not possible to comment on the adequacy of these existing resources. However, in November, 1987, Irish Life announced its intention to acquire the Midwestern United Life Assurance Co. in the United States (giving it trading connections in 49 States) at a cost of IR£62.5 million. Irish Life withdrew from the proposed acquisition in December, 1987, but the company believes that suitable alternative acquisitions will be available.

103.In relation to the matter of the company’s solvency margin Irish Life has expressed the following view:

“Irish Life Offices are rather unique entities. They enter into commitments with policyholders stretching many decades into the future and for that reason the consumer must be satisfied that the office will be around to fulfill its commitments. For that reason a much higher level of solvency is demanded of life assurers than of most other forms of enterprise. It must not only demonstrate that it is not insolvent in the conventional sense that assets must exceed the real value of liabilities, but it must demonstrate that it possesses a degree of solvency well in excess of that.

In the first instance it must demonstrate that it has assets in excess of its actuarial liabilities. These are assessed within regulatory constraints by the Company Actuary and have regard to projected future experience and reasonable deviations therefrom. In addition, the Company must have sufficient surplus to meet more adverse experience from the reasonable deviations mentioned. Within the EEC there is a statutory minimum on this related to the volume and mix of business - IR£65 million in the case of Irish Life at the end of 1986. To the degree that the Actuary considers that the EEC guidelines are inadequate (e.g. Permanent Health Insurance Business) he will require more.

An office will also wish to continue to write business (actuarial liabilities and EEC margins only relate to in-force business) and so it will require “Solidity Surplus” to fund sales and to maintain a continuous cushion in excess of legal requirements.

Lastly, an office will require “Vitatity Surplus” to fund new growth and new ventures.

At the end of 1986 Irish Life demonstrated a solvency margin of IR£256.2m against a minimum legal requirement of IR£65.4m, coverage of 3.9 times. This is not particularly high - the larger UK companies generally lie in the range of 6 to 12 with some as high as 20. An office operating at the minimum is very restricted in terms of the business it can take, the risks it can accept and how it can develop”.

(iii) Existing Shareholders

104.It is not possible to assess with precision the financial benefit to the existing shareholders arising from privatisation. The amount available for existing shareholders would be determined by the following:

(i)A court ruling on a redefinition of rights (attaching to the dividend stream arising from the investments underlying the investment and revaluation reserve) as between with-profit policyholders and company reserves:

The income arising from that portion of the reserve not apportioned to with-profit policyholders could then, technically, become available for distribution to shareholders. However, the Company could not on commercial grounds afford to distribute this income as the current shareholder structure does not permit access to capital markets (which would be available to the Company on privatisation) which would enable it to apply to its shareholders for additional equity it may need in the future to fund expansion costs, or to maintain adequate solvency ratios;

(ii)Appropriate amendments to the Articles of Association of the Life Company; and

(iii)The proportion of the revised share capital which the existing major shareholder would release for public subscription and the issue price of the shares, neither of which can be determined at this time. *Irish Life informed the Joint Committee that, based on the existing dividend chain, the Company would not have any great value if privatised but if structured differently could potentially have some substantial value.

105.According to Irish Life it would be necessary as a consequence of the absence of suitable legislation under which life companies could be reconstructed, that a new company be established and that a transfer of assets be arranged between the new company and the existing Life company.

106.*When representatives of the Association of Scientific Technical Staffs (ASTMS) appeared before the Joint Committee they expressed a number of reservations about privatisation of Irish Life. One reservation was that if the company were privatised there would be an inevitable takeover at some stage; that ASTMS had a lot of experience in the UK of privatisation where it (privatisation) had inevitably led to significant job losses and rationalisation on the basis of the more profitable size of a company remaining; and that ASTMS did not believe that privatisation is the solution because of, particularly, the vulnerability of the company in terms of being taken over by a non-national company.

107.Apropos of this reservation the Joint Committee was advised by Irish Life that what was referred to as a “Golden Share” had been retained by the British government in the case of a number of entities which had been privatised (these included British Gas, Jaguar, Rolls Royce, British Airport Authority) which enabled the British government to maintain a veto over major changes, thus ensuring that no change can go through over a number of key issues.

108.Additionally, the French proposals in regard to U.A.P. and A.G.S., two insurance companies currently being privatised in France, will ensure that foreign ownership will be limited to 20% of the issued shareholding. Irish Life management believe that either of these approaches could effectively be used by the Company in the event of privatisation.

(a)enable Irish Life to overcome on a more permanent basis the problem of the legal objections of certain States in the U.S.A. to government controlled companies operating within their jurisdiction;

(b)provide funds to enable Irish Life to expand its business into foreign markets - mainly the U.S.A.; and

110.While the Company’s intended acquisition of Midwestern United Life Assurance Company was not successfully concluded, Irish Life has demonstrated its financial capacity (within its historical shareholding structure) and a suitable legal framework (the voting trust) to achieve the first two objectives. With regard to objective (c) a significant amount of work remains to be done -

(a)to establish the necessary authority to enable the company to deal with the question of ownership of the dividend stream arising from the investments underlying the investment and revaluation reserve; and

(b)to determine with some degree of precision the financial benefit arising on privatisation to existing shareholders.

111.It is not clear, therefore, that the Company’s capital structure inhibits its expansion plans. However, the Company believes that the public issue of its shares would be necessary if the Government wishes to realise a significant proportion or all of its investment in Irish Life.

112.(i) In the event that a Government decision is taken to privatise Irish Life the Company will need to complete a complex process before it obtains a Stock Market quotation. The appointment of advisors, as follows, will be required to achieve this end:

(a)Sponsor - usually a merchant bank which will be responsible for planning and controlling the entry to the Stock Market including the timing of the issue and the issue price;

(b)Stock Broker - responsible for communication between the Company, the investment community and the Stock Exchange;

(c)Accountants and Auditors - responsible for reporting on the Company’s financial position in any prospectus issued;

(d)Taxation and Legal Advisors - responsible for advising on the implications of the transaction and on compliance with legal requirements; and

The method of entry i.e. through offer for sale or placing and compliance with the Stock Exchange listing requirements, will be advised upon by the above.

(ii) The price at which the shares might be issued for public subscription would be a function of the Company’s net asset base and potential earnings stream, but in the absence of more detailed information it would be impossible to comment on the projected issue price.

(iii) The Joint Committee understands that the flotation of the revised share capital of Irish Life on the Irish Stock Exchange may not give rise to a significant capacity problem, although this is by no means certain. The Joint Committee understands, however, that a capacity problem would not arise if the Company were to obtain a dual listing on both the Dublin and London Stock Exchanges.

(iv) The Joint Committee would urge the Government to take a decision on the submission to Government made by the Company in order to eliminate the present uncertainty.

Acknowledgements

113.The Joint Committee wishes to express its appreciation of the work of the former committee which initiated and progressed this inquiry. That committee had not finalised a report to the Houses when it ceased to function on the dissolution of the Dáil in January, 1987.

The Joint Committee wishes to express its thanks to Mr. Kieran Corrigan, Mr. Kieran O’Farrell and Mr. Liam Farrell of Cooney Corrigan & Co., Chartered Accountants, for their invaluable assistance throughout this inquiry.

FIRST REPORT

IRISH LIFE ASSURANCE PLC

INTRODUCTION