"Phoenix has been evaluating Guardian Financial Services as part of an on-going sale process for the Guardian Financial Services business," it said in a statement to the London Stock Exchange today.
"Discussions remain on a non-exclusive basis. There can be no certainty that these discussions will lead to any transaction."
The proposed transaction follows months of deals taking place throughout the UK insurance sector, the most recent being Mitsui Sumitomo’s £3.5bn offer for Amlin.
Discussions are taking place between Phoenix and Cinven about a deal that would create a £70bn asset manager, according to Sky News, which first reported the story.
If the transaction completes, it will bring around £1.7bn of pension annuity assets previously owned by Phoenix back into the company fold.
Phoenix sold its annuities book to Guardian in August 2014, in a bid to slash its debt.
The company has been interested in making an acquisition for a while, and previously held talks with Friends Life, which was subsequently snapped up by Aviva in a £5.6bn megadeal.
Chief executive Clive Bannister, who is the son of four-minute miler Sir Roger Bannister, said last year that the firm had built a “sound platform to consider potential acquisition opportunities, enabling us to grow the business”.
The group’s current chairman is Henry Staunton, who also chairs WH Smith. He took over from Sir Howard Davies at the beginning of this month, after Davies left to lead the board at Royal Bank of Scotland.