Closed book provider Phoenix Life is in negotiations with fellow consolidator Guardian Financial Services over a possible acquisition.
Phoenix says discussions are on a non-exclusive basis and “there can be no certainty that these discussions will lead to any transaction”.
The statement says: “As stated at the time of the 2015 interim results on 20 August 2015, Phoenix believes there are a number of potential acquisition and consolidation opportunities in the UK closed life sector and has been reviewing those options within the framework of its existing commitment to stakeholders.
“Having secured an investment grade rating earlier this year, the group is well positioned to take advantage of the consolidation opportunities in its sector.”
In July 2014, Guardian bought £1.7bn of annuity assets from Phoenix for an undisclosed sum.
In June 2012, Phoenix transferred £5bn of annuity assets to Guardian.
Guardian also acquired closed life assurance business Ark Life from AIB in December 2013. Ark Life manages €4bn (£3.2bn) of assets and 270,000 policies in Ireland.
Pre-tax profits at Phoenix fell by 45 per cent in the first six months of the year following the sale of Ignis Asset Management, according to its 2015 interim results.