The Minister for Health Mary Harney had backed moves by Axa to take over the health insurance business of Bupa Ireland.
Speaking after a meeting with Axa executives yesterday, Ms Harney said that if it acquired Bupa's business in Ireland it "would be a good thing".
She said Axa was interested in taking over all of Bupa's operation as well as its staff. "That is very good news and it is very reassuring and I certainly would expect that, as a reputable company, Bupa would facilitate the orderly transfer of staff to a company that seems to be interested," she said.
However, Bupa Ireland is strongly rejecting the approaches from Axa.
Bupa chief executive Martin O'Rourke said last night his company would not be entering into talks with Axa or anyone else. He said Bupa Ireland would continue with its strategy of winding down its operation here, but that if the Government amended the rules regarding the operation of the controversial risk equalisation scheme, it would want to be part of such a changed regulatory environment.
Axa chief executive John O'Neill said that his company was interested in taking over Bupa's business but that matters were at a delicate stage.
He said that Minister and her department were supportive of the plans and that talks would continue with officials.
He said that Axa would like to bring matters to a conclusion very quickly.
It is understood that among the issues under discussion with the Department of Health is whether Axa would be considered as a "new entrant" to the market if it acquired Bupa's business, and whether it would receive the three-year derogation from having to make risk equalisation payments which is afforded to such operators.
The provision of such a derogation to Axa is likely to be opposed by the VHI, which stands to gain tens of millions annually in risk equalisation payments from Bupa.
Informed sources said Axa appeared to be interested in the prospect of becoming the number two player in the market by taking over Bupa's business rather than by establishing its own operation in Ireland.
It is understood contact between Axa and Bupa has been by letter rather through face-to-face talks. Axa is understood not to have made a formal offer for the Bupa business.
Ms Harney said the first approaches were made by Axa to Bupa last October. She said Axa had a strong track record in providing insurance in Ireland and that it had 23 per cent of health insurance market in the UK.