SYDNEY/TOKYO (Reuters) - Nippon Life Insurance Co [NPNLI.UL] is in "serious" talks to buy National Australia Bank Ltd's (AX:NAB) insurance business in a deal that could be worth up to $2.5 billion (1.61 billion pounds), Japan's Yomiuri newspaper reported on Thursday.
Nippon Life hopes to finalise the deal by year-end, the daily said, without citing any sources. In June, the Nikkei business daily reported the companies were in preliminary talks for a deal that could be worth 200 billion to 300 billion yen ($1.67 billion-$2.50 billion)
Asked about the report, Nippon Life, Japan's second largest insurer by revenue, declined to comment directly on the deal, saying it was considering mergers and acquisitions, but that nothing had been decided yet.
NAB declined to comment and JP Morgan, which sources told Reuters is advising the bank on the deal, also declined to comment.
Australia is an attractive market for life insurers, as average incomes are higher than in emerging markets such as Southeast Asia and its population of 23 million is growing steadily.
Nippon Life has said it was on the lookout for domestic and overseas mergers and acquisitions as it faces slowing growth at home and an increase in competition with the planned November listing of Japan Post's insurance arm.
The insurer is also in talks to buy smaller local rival Mitsui Life Insurance Co, people familiar with the matter said this week.
The insurance business sale would help NAB focus on its core banking business in key markets Australia and New Zealand. The bank is speeding up asset sales to catch up with rivals after being held back by its troubled UK business for years.