The troubled UK life insurer Equitable Life is nearing a deal to sell a book of non-profit annuities to Canada Life, according to reports.

The Financial Times says the move would mark a significant step towards reducing the risk and investment burden borne by existing Equitable policyholders. The annuities are worth around GBP4.5 billion, the newspaper says.

Ultimately it is thought that the development could precede a wholesale dismantling of the crisis-stricken mutual. The insurer unsuccessfully tried to sue its former auditors and a number of ex-directors following its near collapse in 2000. At the time it had to cut the returns given to policyholders to stave off bankruptcy.

Policyholders who had lost out in the initial financial crisis at the firm failed to recoup any money from the aborted legal action, while Equitable itself was saddled with GBP45 million in legal costs.