UK-based life insurer Phoenix Group is negotiating with Zurich-based Swiss Reinsurance, for £3bn merger with its subsidiary Admin Re, in a bid to emerge as the bigger company in the insurance sector.

If the proposed combination of both firms concludes successfully, which have market capitalization of £1.46bn each, Swiss Re is expected to become a major shareholder in the united company, as reported by Sky News.

It is most likely that an announcement by the concerned parties will be made soon and Phoenix might issue new shares to Swiss Re.

Following completion of the transaction, the integrated entity will have more than £100bn of assets under management and approximately 10 million policy-holders.

Deutsche Bank is offering advice to Phoenix, while Swiss Re is being advised by JP Morgan Cazenove over the potential merger transaction.

Phoenix and Swiss Re declined to comment on the issue, and the discussion is an early stage and could still fall apart before a deal can be announced.

Both Admin Re and Phoenix operate as closed book insurers, involved in acquiring life insurance operations, which have stopped taking in new customers and then seek to integrate the companies into profitable ones by reducing operational expenses.