A Royal London spokesman has confirmed that discussions are taking place between the two firms but says they are at an early stage.
The news follows talks between LV= and Royal Liver last autumn about a potential merger. The Mail on Sunday reports that these discussions broke off after LV= could not give assurances about the future of Royal Liver’s Irish operations if a deal went ahead.
The talks are thought to have been spurred on by the FSA’s investigations into the mutual sector and concerns regarding the capital adequacy of smaller mutuals. Last October, the FSA sent out a Dear CEO letter to mutual insurers with with-profits funds about the use of member assets. Any deal would have to be approved by Royal Liver’s 200-stong committee of elected members.
The Mail on Sunday also reports that the FSA is poised to take enforcement action against Royal Liver’s handling of the wind-up of its IFA arm Park Row.
In March last year, Money Marketing revealed that Park Row was being investigated by the FSA as part of a review of its systems and controls.
Royal Liver attempted to sell off the loss making arm of the business but could not find any buyers and Park Row was wound down late last year.
Since then former Park Row advisers have suffered long delays getting reauthorised by the FSA.