Resolution Group, the consolidation vehicle which bought Friends Provident last year, is in talks to buy AXA UK's annuity, protection and group pensions business for £2.75bn.
It is understood the group, led by entrepreneur Clive Cowdery, is speaking to investors about a huge rights issue to fund the deal which it hopes to wrap up in the next fortnight.
If the transaction is successful, it would lead to the creation of one of the UK's largest protection and group pension businesses. Friends Provident made the decision to focus on these areas as well as its International arm following a strategic review in 2008.
However, the deal will not include AXA UK's Wealth arm which encompasses the AXA Elevate wrap platform and multi-manager unit Architas. AXA would also keep its presence in the general insurance and health markets.
In a statement, Resolution confirmed it was in discussions with AXA: "If implemented, this transaction would result in the acquisition by Resolution of the majority of AXA's life assurance operations in the UK.
"Resolution intends to consolidate the AXA businesses with its Friends Provident operations, consistent with its view that value for shareholders can be created from consolidation in the UK life and pensions market, particularly in the areas of risk and group pensions."
The Board of Resolutions believes the possible transaction would result in: "improved cash flow and dividend prospects from the emergence of cash across the combined business, principally, from management of new business strain, financial restructuring, delivery of financial synergies, and from expected releases, over time, from AXA UK's reattributed inherited estate."
However, the company said there was no certainty the talks would result in a transaction.
Resolution bought Friends Provident for just under £2bn last year and said it expected to consolidate three or four businesses by the beginning of next year. It plans to sell an enlarged group by the end of 2012.
