AIG is in talks with advisers to explore the divesture of its British life insurance business, the sources said.
If the deal materialises, it could generate more than £500m for the US-based insurance major.
Meanwhile, French insurance company AXA is exploring options for its UK operations, including a potential sale.
The sources cautioned that the deliberations for both transactions are at an early stage and a deal may not materialise.
According to the report, dealmaking in the insurance industry has remained largely strong despite a general slowdown in mergers and acquisitions.
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This is said to have been facilitated by insurers’ efforts to simplify their operations and quit business lines to reallocate money to their key areas.
Last month, US-based Liberty Mutual reached an agreement with Italian insurer Generali to sell its Spanish business Liberty Seguros in a €2.3bn ($2.52bn) deal.
At the time, Liberty Mutual president and CEO Tim Sweeney said: “This decision further helps Liberty Mutual sharpen our operational focus to deliver exceptional value across our channels, products and markets.”
In May, AIG signed a definitive agreement to sell its reinsurance operations to RenaissanceRe for just under $3bn to simplify the business model and reduce volatility.
Most recently, it was reported that AXA is looking to sell its reinsurance business, XL Re.