Phoenix Group Holdings (PHNX.L), Britain's largest owner of life insurance funds closed to new customers, said on Friday it was in advanced talks to buy Deutsche Bank AG's (DBKGn.DE) British insurance business, Abbey Life Assurance.
Deutsche Bank has been weighing the sale of Abbey Life since October, sources had told Reuters, as Germany's largest lender restructures its business amid increasing regulation, negative interest rates and a competitive home market.
"This is a substantial business and we are buying it if we get the opportunity," Phoenix CEO Clive Bannister told Reuters. "That is our intent and clearly it's subject to all sort of things that may or may not happen."
He declined to comment on whether the company was raising funds and also the deal size.
Deutsche Bank was nearing a deal to sell the business to Phoenix, with the latter planning to raise 800 million pounds to fund the purchase, a person close to the matter told Reuters on Thursday.
Deutsche Bank declined to comment on Friday.
Bannister had told Reuters in August that the company was scouting for acquisitions to help gain scale in a challenging, low-interest-rate environment following Britain's vote to leave the European Union.
"To us, this deal could be the making of Phoenix as an acquisition vehicle for closed life funds and we eagerly await details if it does, indeed, proceed," said Eamonn Flanagan, an analyst at Shore Capital.
Abbey Life, bought by Deutsche Bank for 977 million pounds in 2007, is valued at about 1 billion pounds, sources told Reuters in June.
Bannister said Phoenix would look at other opportunities if the deal with Deutsche Bank fell through.
Other potential buyers for Abbey Life include Swiss Re AG (SRENH.S) unit Admin Re, and Legal & General Group Plc (LGEN.L), sources previously told Reuters.
Abbey Life is among six insurers being investigated by UK's Financial Conduct Authority over their treatment of long-time life insurance customers. The investigation could result in compensation payments to policy holders or fines.
Bannister said Phoenix would fulfil all responsibilities to the regulator that a purchase of Abbey Life brought with it.
Shares in Phoenix were up 0.5 percent at 846 pence at 1202 GMT on the London Stock Exchange.
(Reporting by Noor Zainab Hussain in Bengaluru, additional reporting by Soumithri Mamidipudi; Editing by Sunil Nair and Sherry Jacob-Phillips)