The Co-op Group is reportedly in talks to sell its insurance business to underwriter Markerstudy Group in what would be a £300m deal.
According to Sky News the talks between the two companies are at an advanced stage, though no decision has been taken be either side on whether to proceed with the deal.
Sky reports that Co-op has been exploring a sale of its insurance business since the summer with Aviva, AA, RSA Insurance and Saga all reportedly expressing an interested in the business.
Despite the crowded field Markerstudy has been tipped as the firm most likely to successfully takeover the business.
The Co-op previously put its insurance arm up for sale in 2013 after it emerged that its bank had a £1.5bn black hole in its balance sheet.
In the resulting fall out it emerged that the chair of the Co-op bank, Methodist minister Paul Flowers, had taken crack cocaine and crystal meth, leading to the nickname the Crystal Methodist in the press.
The Co-op sold its life insurance business to Royal London, but cancelled the sale of its general insurance business in 2014 after it decided it did not need the money.
Any sale is not set to lead to the Co-op exiting the UK insurance market with the mutual actually planning to expand the proportion of its membership base that buy at least one of its policies.
Sky reports that any buyer would be asked to commit to a long-term deal to sell insurance products under the Co-op brand.
Currently the Co-op underwrites its own motor and home insurance policies with travel insurance policies underwritten by US firm Mapfre.
The Co-op and Markerstudy both declined to comment.