Parts of Eagle Star could be sold of as part of a major strategic review by BAT.
But BAT chief executive Martin Broughton plays down suggestions that BAT will sell off Eagle Star entirely.
BAT is to merge its financial services arm BAFS with Zurich Group later this year.
BAT has already been forced to revise the deal, reducing its stake in the combined group to 43 per cent from 45 per cent to reflect poor performance in BAT's share price.
Analysts have long regarded Eagle Star as the weakest part of BAFS, mainly because of its general insurance liabilities, and have raised questions about its future as part of the new group.
BAT group director of corporate affairs Michael Prideaux says: "The review is to do with improving Eagle Star's profitability and focusing on claims management."
He does not rule out sell-offs but says no decision has yet been made.
BAT Industries' profits fell last year to £1.75bn from £2.495bn in 1996.
BAFS profits were up by 7 per cent to £1.05bn despite a provision of £85m to cope with Allied Dunbar's pension review cases.
Zurich press officer Helen Baldwin says the company will not comment on the review. She says: "The merger does not go through until the end of the year. We cannot comment on BAT operations."