Swiss Re in talks to merge unit with Phoenix Group

Insurer Swiss Re said on Friday it was in preliminary talks about merging its Admin Re business unit with Britain's Phoenix Group Holdings, confirming a media report.

"There is no certainty that these discussions will lead to any transaction. Further statements will be made if and when appropriate," the Swiss group said in a statement.

Sky News reported on Thursday that a deal between the two could be worth 3 billion pounds ($4.5 billion) and would create a business with more than 100 billion pounds under management and close to 10 million policy holders.

Earlier this year, Phoenix, which has a market capitalisation of about 1.5 billion pounds, said it was ready to consider acquisitions for the first time in two years after hammering out easier terms with banks.

Phoenix, formerly known as Pearl and which was forced into a financial restructuring in 2009, makes money by buying life insurers that are closed to new customers and running them more efficiently.

Swiss Re has used its strong capital position to please shareholders with payouts.

Last month, it said it would stick to financial targets for 2011-2015 and focus on dividend growth while shifting assets towards corporate debt and away from government bonds.