Shares in Irish Life & Permanent rose almost 5 per cent yesterday amid speculation that German insurer Allianz may look to buy back Irish Life's 30 per cent stake in its Irish business.
Dealers reported significant interest in the stock following Allianz's announcement on Thursday that it was spending €7.5 billion in cash buying out minorities in two core insurance subsidiaries in France and Germany, a move described by market sources as the company's way of tidying up its operations.
Irish Life has a 30 per cent stake in Allianz Ireland and, while Allianz has not specifically said it is looking to buy back the stake, it is believed that Thursday's announcement marked the start of a longer process of reorganisation.
Irish Life declined to comment on the speculation and sources close to the company said that Ireland was likely to be a long way down the list as far as Allianz's operation to consolidate its interests is concerned. Thursday's announcement concerned the acquisition of 42.4 per cent of the shares in Assurance Générale de France that Allianz does not already own, as well as the 9 per cent stake in Allianz Lebensversicherungs it does not already control.
In its latest trading update released in December, Irish Life said Allianz was performing well and that as a result it expected its 30 per cent interest to generate more than €50 million after tax. Under the terms of the agreement, Irish Life is entitled to a place on Allianz Ireland's board, but the business crossover is believed to be limited, with only a handful of products being sold by both parties.
Irish Life shares rose as high as €22 yesterday, before falling back to close up 38 cent, at €21.38. More than 2.6 million units changed hands, making it the busiest of the Irish financial stocks and on the day, the best performer.
