The UK's second largest life insurer, Prudential, is reported to be in talks with struggling Equitable Life to take over its annuities.

Early speculation suggests that Prudential is looking to buy around GBP5 billion of Equitable Life’s conventional annuities, and GBP2 billion of its with-profits annuities.

The move, though unconfirmed, would follow the recent purchase of the annuity book of financial services firm Resolution Life for GBP1.5 billion. It would also come as good news for Equitable Life’s long suffering shareholders, who in recent months have witnessed the collapse of a number of lawsuits against the company’s former directors.

A source close to the deal told the Scotsman newspaper that talks have been going on but it is most likely the Pru will do this deal with Equitable in phases.

Doing due diligence on GBP7 billion of annuities at once is very complex. There are all sorts of issues, such as longevity [of policyholders] to take into consideration.