Lloyds TSB is considering selling Abbey Life after the company instructed its investment bankers to look into potential buyers.
A sale of the insurance subsidiary, which contains about £12bn of closed life policyholder assets, could fetch up to £1bn according to analysts.
Abbey Life has been closed to new business since 2000 and is expected to attract attention from buyout firms such as Resolution, Swiss Re and Pearl Group.
It is understood that Lloyds TSB has no plans to sell Scottish Widows which it acquired in 1999.
Lloyds has refused to comment.