LONDON (Reuters) - Britain's Cooperative Group could offload its life insurance arm as it reorganises its financial services division following last year's merger with Britannia, a source familiar with the situation said on Sunday.
Mutually-owned Cooperative, which runs businesses ranging from supermarkets to funeral homes, has appointed Deutsche Bank to review options for the life arm including a possible sale.
The society has sent information packs to potential bidders for the unit, which sells pensions and protection insurance and has 18 billion pounds in assets, in an effort to gauge the level of buyer interest, the source added.
Cooperative and Deutsche Bank both declined to comment.
Potential suitors for the business include listed insurers Legal & General (Legal & General Group PLC), Aviva , Resolution (Resolution Limited ORD NPV) and Phoenix Group, as well as rival customer-owned insurer Royal London, the Mail on Sunday and Sunday Times newspapers reported.
The review of Cooperative's life unit follows the January 2009 merger between its financial services division, which also includes banking, asset management and general insurance operations, and Britannia, the UK's second-biggest building society.
The merger enlarged Cooperative's branch network, and the society wants to sell more products through its bank premises rather than through a direct sales force, currently the main channel for its life insurance products, the Mail on Sunday said.
Britain's life insurance sector has seen a high level of M&A activity this year as major insurers restructure to pursue high-growth markets in Asia, throwing up opportunities for UK-focussed players.
France's Axa sold most of its British business to Resolution for 2.75 billion pounds in June, freeing it up to focus on Asia, while Prudential the previous month narrowly failed to buy AIG's (American International Group) Asian business in what would have been the sector's biggest ever deal.
Aviva and Resolution declined to comment, while L&G, Phoenix Group, and Royal London could not immediately be reached.
(Reporting by Myles Neligan; Editing by David Cowell)