Aviva and Friends Life in Â£5.6bn talks
Aviva, which employs more than 5,000 staff in Norwich, is in talks with Friends Life about a possible £5.6bn merger. If agreed, the group would become the UK's biggest insurance and savings business.
In a statement, the two companies said a combined entity would have 16 million customers who would "stand to benefit from being part of a stronger and more diversified group".
Aviva would offer Friends Life shareholders 0.74 shares for each Friends Life share. The board of Friends Life has indicated it will recommend the offer, which equates to 399 pence per Friends Life share.
"Over the past two years, Aviva has gone through a major transformation, creating significant value for its shareholders," Aviva said.
"The combination with Friends Life would accelerate Aviva's transformation in line with its strategy of increasing group cash flow and investing for growth in its chosen markets."
A joint statement added: "A combination of Aviva and Friends Life would create the UK's leading insurance, savings and asset management business by number of customers, with a stronger balance sheet and significantly higher cash flows, enhanced by substantial synergies, from which to accelerate dividend growth."
The deal would be the largest in the insurance sector since the merger of CGU and Norwich Union in 2000.