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With Schmidt at the helm in the stands and first five-eighth Sexton pulling the strings on the pitch, Ireland won a Six Nations grand slam, claimed a 2-1 series victory in Australia and a clean sweep of four wins in their November internationals, highlighted by a first home win over New Zealand.
In Ireland they won 11 of their 12 games in 2018, with the only setback coming in the first of the three-match series in Australia.
All Blacks first five-eighth Beauden Barrett, who was also nominated, won the player of the year award in 2017 and 2016.
Sexton is the first non-New Zealand winner since Frenchman Thierry Dusautoir in 2011 and the second Irishman after Keith Wood, who won the inaugural edition in 2001.
The All Blacks had claimed the team of the year award every year since 2009 but that also went to Ireland, for the first time.
The women's player honour went to France fullback Jessy Tremouliere, while South Africa winger Aphiwe Dyanti won the breakthrough player award.
The All Blacks were not overlooked altogether as lock Brodie Retallick's try against Australia in Sydney, finishing off an 80-metre move, was voted try of the year.