Friends Life reportedly held talks with closed book provider Phoenix alongside its negotiation with Aviva.
City AM reports talks were held between Friends and Phoenix on an informal basis and are not ongoing. If the Aviva deal does not proceed, Friends may revert to pursuing another deal and possibly return to Phoenix.
One source told the newspaper: “The fact is that Phoenix has a list of five or six closed book businesses that it could do a deal with and Friends is one of them.”
Aviva and Friends put out a joint statement on Friday night confirming they were in talks over a possible merger worth £5.6bn deal. When the markets opened on Monday, Friends shares were up 6 per cent while Aviva shares fell almost 5 per cent.
If the deal between Friends and Aviva completes, the merger would create the largest insurance and savings business in the UK with 16 million customers.