National Mutual has put itself up for sale, with Liverpool Victoria tipped as one of the favourites to snap up the life office.
Liverpool Victoria has been involved in many recent bidding wars, losing out to Abbey National for Scottish Provident and Royal London for Scottish Life.
Industry sources also point to Britannic, GE Capital and other companies involved in the bidding for Equitable Life as possible candidates.
Specialist pension provider National Mutual is valued at about £500m.
Of its 250,000 policyholders, 150,000 are classified as members investing in the with-profits fund. It has £4.8bn in assets but windfalls are not expected to be high.
The life office has recently been writing unitised rather than with-profits business. Since late 1998, it has been refocusing its business, specialising in midto high-net-worth clients, income drawdown, self-invested personal pensions and small self-administered schemes.
It has appointed investment bank Dresdner Kleinwort Wasserstein to find a buyer.
Liverpool Victoria will not comment on speculation. In January, it bought healthcare insurer Permanent Insurance from Equitable for £150m.
National Mutual managing director Gavin Hill says: “Growth of our unit-linked business means fewer and fewer of our customers will be members of the society. This has been an important contributor to the decision to review our mutual status.”
Torquil Clark pensions development manager Tom McPhail says: “National Mutual's market position is driving this. It would find it increasingly difficult to compete in the aggressive market we are facing.
“The people who pulled out from Equitable are likely suitors. Bidders will be looking at NatMut's systems, client bank and staff. Standard Life is now the notable exception on the mutuality front.”