Eagle Star has moved to reassure its pension fund investors after the sharp fall in Elan's share price. Eagle said it was "significantly underweight" in Elan shares, with a holding of just 1.7 per cent at the end of December 2001.

In the final quarter of 2001, the fund manager said it sold 143,000 Elan shares, generating a profit of €7.1 million (£5.5 million) for its funds. At the close of business on Monday, Eagle's holding in Elan was just 0.5 per cent of its policyholders' pension funds, the firm said.

Following the sale of the tranche of 143,000 shares, the firm continued to reduce its Elan shareholding in the beginning of the year, it said.

Disclosing its internal risk management guidelines, Eagle said the amount of any one stock it could hold in any one fund was limited to a maxium of 3 per cent of the total value of the fund.