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Great-West Lifeco CEO Allen Loney

FRED GREENSLADE/REUTERS

Great-West Lifeco Inc. is buying Ireland's biggest life insurer for $1.75-billion, a bet that the end of the European economic crisis – which killed the same deal more than a year ago – is in sight.

The Winnipeg-based insurer first eyed Irish Life Group Ltd. in 2011, but walked away as waves of downgrades, bailouts and government spending cuts swept across Europe.

The acquisition, which requires regulatory approval, has all the hallmarks of a Desmarais move. The Montreal family, which controls Great-West through its Power Financial Corp. unit, has built a financial services empire by acquiring underperforming or undervalued insurers and asset management companies and turning them around.

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"We thought Irish Life was a great property, we just wanted to bide our time as things improved," Great-West chief executive officer Allen Loney said in an interview from Dublin.

Waiting to make a deal meant that Great-West was negotiating not with a parent company, but the Irish government, which stepped in to buy the business from its controlling owner for €1.3-billion ($1.7-billion) in June.

Great-West will fold the Irish operations of its Canada Life subsidiary, which has worked in the country since 1903, into Irish Life.

Great-West gets a business that has been profitable, with a solid capital ratio, even as many European financial institutions struggle to recover from the economic downturn.

The purchase is set to increase Great-West's consensus earnings by 10 per cent in the first full year of ownership. On top of insurance, Irish Life is a leader in pensions and investment management.

Irish Life is also the second major Great-West acquisition of a company during a period of distress. In 2007, Great-West acquired underperforming asset manager Putnam Investments from its troubled U.S. parent Marsh & McLennan Cos.

Mackenzie Financial Corp., in 2001, and Canada Life in 2003 are examples of successful Power takeovers.

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Irish Life was also recently in the clutches of a struggling parent company. Before the Irish government stepped in last year, the insurer was a division of Irish Life & Permanent, the country's biggest mortgage lender, which was grappling with a €4-billion capital shortfall.

Now, the outlook for Irish Life's insurance business has brightened. Rating agencies such as Standard & Poor's have improved their outlook on Irish Life to "stable" from "negative." On Tuesday, Fitch Ratings reiterated this view, calling Irish Life's business model low risk and well-capitalized – a status it expects Great-West to maintain.

When rumours surfaced in late 2012 that Great-West was again sniffing around, analysts expressed enthusiasm over a price point of €1.3-billion – exactly where the deal landed. National Bank Financial analyst Peter Routledge called Irish Life an attractive strategic asset and said the "near-term valuation risk may be a small price to pay for the long-term potential of the asset."

Great-West's Mr. Loney says the company is unlikely to match the Asian ambitions of rivals Manulife Financial Corp. and Sun Life Financial Inc., which have made recent deals in Cambodia and Malaysia, respectively.

Instead, foundations the company has built in U.S. and Europe make these regions ideal growth zones for Great-West, Mr. Loney said.

"We've been there through thick and thin," Mr. Loney said. "And although things have been fairly unpromising recently for us in Ireland, this is the dawning of a new day." He wouldn't rule out Asia altogether, but said the company has enough challenges ahead to keep it occupied.

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