(Reuters) - Phoenix Group Holdings (L:PHNX), Britain's largest consolidator of closed life funds by total assets, said on Thursday that it was in non-exclusive talks to buy rival Guardian Financial Services, sending its shares up 3 percent.
Phoenix, confirming media reports from a day earlier, said it was evaluating a bid for Guardian Financial as part of its plan to explore consolidation opportunities in the UK closed life sector.
Phoenix, which makes money by buying European life insurers that are closed to new customers and running them more efficiently, did not disclose any further details.
However, Sky News, which first reported the possible deal, said any bid for Cinven's Guardian Financial could have a price tag of more than 1 billion pounds and that Swiss Re AG's (VX:SRENH) closed life funds arm, Admin Re, was also eyeing the company.
Tighter European regulations coming into force next year, fierce competition, and low investment returns have helped encourage a series of deals in the European insurance sector.
Life insurance companies have particularly come under pressure due to pension reforms in Britain as retirees no longer need to buy income-bearing products with their pension pots.
Due to its private equity-like business model and strong cash position, Phoenix is seen as a potential acquirer in the current buy-or-be-bought environment.
A takeover of Guardian Financial would bring assets worth about 18 billion pounds to Phoenix, whose life companies held assets worth 52 billion pounds as of Dec. 31, 2014, according to its website.