Shares of Swiss Life Holding AG (SLHN.VX) rallied Monday for the third consecutive day following news reports that Allianz SE (ALV.XE), Europe's largest insurer, is preparing an offer for the Swiss insurer.

Both sides declined to comment on the reports, but Swiss Life's shares continued to post strong gains. At 1108 GMT, they were up CHF12.20, or 8.4%, at CHF157. Germany's Allianz was down EUR0.43, or 0.5%, at EUR87.62.

Citing Swiss banking sources, French Web site Wansquare reported Sunday that Allianz is preparing an offer. It suggested a bid price of around CHF5.5 billion (EUR3.73 billion).

Despite the Swiss Life share-price surge, analysts were divided about the possibility of an offer surfacing. "You can never say never, but I believe Allianz bidding for Swiss Life is highly unlikely," said William Hawkins, an analyst with Keefe, Bruyette & Woods.

Still, some saw logic to a potential deal.

"We do not see such a deal as highly probable, but such a transaction could make good sense for Allianz," said Stefan Schuermann, an analyst at Bank Vontobel.

A Frankfurt-based analyst said an acquisition would enable Allianz to gain substantial market share in Switzerland, France and Germany, where Swiss Life is strong.

"In Switzerland, Allianz would reach a market share of some 35% compared with the current around 6% and would be the clear No. 1, ahead of [France's] Axa," the analyst said. "Switzerland is a difficult market for insurers, with only small growth rates and low capital market rates; it might be interesting to get economies of scale there."

Vontobel's Schuermann said Allianz's market share in Switzerland isn't enough and raises questions for Allianz to "either double up or leave this market as Generali did." Italy's Assicurazioni Generali SpA (G.MI) exited the Swiss group life market several years ago.

In France, where Allianz has lost market share over recent years, an acquisition of Swiss Life would enable it to regain market share non-organically, the analyst said.

In Germany, where Swiss Life owns AWD Holding AG, previously an independent adviser, an acquisition would enable Allianz to get a strong distribution channel, the analyst said. AWD financial advisers are able to sell insurance products, but also banking and asset management products, he added.

Analysts put a price tag of around EUR4 billion on Swiss Life, which they said Allianz could afford. Allianz has a market value of about EUR40 billion.

Nonetheless, some analysts think the price could be too high if an acquisition were seen as just providing a distribution channel.

And as the speculation mounts about a possible deal, it is also making the Swiss insurer more expensive. Since the start of the year, its shares jumped more than 20%, giving it a market capitalization of CHF4.64 billion (EUR3.14 billion).

Another analyst in Frankfurt said that Allianz might be able to get a more suitable acquisition at a good price elsewhere at this time, as many companies are putting insurance operations on the market in exchange for state aid. For instance, Royal Bank of Scotland (RBS), American International Group (AIG) and ING Groep NV (ING) all have put insurance assets up for sale.

Meanwhile, U.S.-based asset manager Blackrock Inc. (BLK) has acquired a 3.71% stake, or 1.19 million shares, in Swiss Life, the Swiss stock exchange reported Monday.

-By Ulrike Dauer and Goran Mijuk, Dow Jones Newswires; +49 69 29725 500; ulrike.dauer@dowjones.com
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