South African life office Liberty Life has amassed a £2.5bn war chest to spend on acquisitions.
The company says it is looking at buying an international life office and has drawn up a short list of two or three targets. Any deal would see its London-listed subsidiary Liberty International break through into the FTSE 100. Many believe the most likely target for an acquisition would be in the US.
Liberty Life chairman Donald Gordon says: "We are looking for a life company. The medium-sized insurers are, by and large, overvalued. In general, the bigger they get the cheaper they are."
Former Prudential UK chief executive Jim Sutcliffe joined the Liberty group in January with a mandate to assess prospective targets.
Last week, Liberty announced it planned to merge with Standard Bank to create South Africa's biggest financial services group, with local assets of more than $60bn.