Royal London is in negotiations with fellow financial services provider LV= regarding a tie-up and could reach an agreement within days.
A deal would see the groups merge their pensions, life insurance and asset managements businesses, according to Sky News.
The transaction would end LV=’s 177-year status as an independent business and create a “mutual champion” with almost 10m customers.
LV= executives have met this week to discuss the progress of a strategic review, the report claims, which could see a deal completed in days.
However, the discussion are not yet exclusive, with private equity firm Bain Capital also said to be pursuing a possible deal with LV=.
The valuation of LV= is believed to be in excess of £500m, although remains somewhat unclear.
The firm manages assets worth £14bn, whereas Royal London manages £139bn worth of assets. Any transaction would enhance the latter’s position as the UK’s biggest mutual life, pensions and investment company.
LV= has been a smaller operation since selling its general insurance operations to Allianz at the end of last year.
The two groups employ 6,000 staff between, although Royal London account for more than two thirds of that.
Royal London, LV= and Bain Capital all declined to comment.