Irish Life, the biggest insurance company in the State, has been sold to Great-West Lifeco for about €1.3 billion.

The insurance company has been controlled by the government as part of the bailout of Irish Life & Permanent. The sale of Irish Life will allow the Department of Finance to recoup some of the €4 billion cost of bailing out Permanent TSB bank.

Great-West Lifeco is the owner of Canada Life, which has been in Ireland for more than 100 years and employs about 500 people.

“The acquisition of Irish Life is transformational for our companies in Ireland. It allows us to achieve – with a single transaction – the leading position in life insurance, pensions and investment management,” said Allen Loney, the Northern-Ireland born chief executive of Great-West Lifeco.

The company said Canada Life will move to Irish Life's Dublin headquarters. Any job losses at the two companies will be achieved voluntarily, it said in a statement. There will be no impact on policyholders in both companies.

Great-West has been interested in buying Irish Life for a number of years. When the government took control of the company it immediately put it up for sale with the hope of a buyer paying up to €1.7 billion. However, the turmoil in the eurozone put the deal on the backburner.

Finance Minister Michael Noonan said the proceeds from the sale will positively impact the Exchequer deficit.

“Today’s deal is the first time during this crisis that a company in which we have invested has been returned fully to private ownership. This is a historic transaction and provides the Irish taxpayer with a full return on its investment in Irish Life,” the minister said in a statement.