AGF bid may add to Irish insurance shake up

The Irish insurance sector could be set for a further shake-up, with the Generali Group bidding for French insurer, AGF, which…

The Irish insurance sector could be set for a further shake-up, with the Generali Group bidding for French insurer, AGF, which has a majority stake in AGF-Irish Life Holdings, the owner of general insurers Church & General and the Insurance Corporation of Ireland,

Meanwhile, Bank of Ireland has emerged as the front runner in the race to buy New Ireland, with Irish Life also still believed to be in the frame. The purchase price will be about £270 million.

Industry sources believe that Bank of Ireland has made a strong bid, which would give it a good healthy share in the life assurance market. Irish Life is also thought to still be in the race, although a merger between it and New Ireland would raise competition issues.

Meanwhile, Church & General and Insurance Corporation of Ireland have a combined premium income of £175 million, representing around 15 per cent of the general insurance market and will have a new majority owner if the Generali bid succeeds.

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Irish Life holds 30 per cent of AGF-Irish Life Holdings, with the balance held by the French group. It is not clear what attitude Generali would have to the Irish operations if its hostile bid for AGF succeeded.

Overall, Europe's insurance sector looks set for a key new phase after its consolidation yesterday. As well as the Generali bid, there was confirmation that Zurich Insurance Group was in talks with B.A.T. to acquire its financial services arm.

If they go ahead, the mergers will create two cross-Border insurance giants which will be a formidable force both in the European and global markets.

Whatever the outcome of the Generali bid, AGF is unlikely to emerge as an independent company.

Any merger with AGF will also have a cross-Border impact on the privatisation of Gan later this year.

If Generali is successful with AGF it will leave Allianz in a prime position.