Shares in Friends Provident have risen after the US private equity firm JC Flowers said it was considering making an offer for the insurer.
In a statement the firm said it "intends to approach the board of Friends Provident with a view to developing a proposal".
Friends Provident has been considered a target since an £8.7bn merger with Resolution fell through last year.
The firm was one of only four climbers on the FTSE-100, ending 3.6% higher.
Sources quoted by Reuters news agency said that JC Flowers had approached Friends Provident late last year, but that the insurer's board had been concerned about its ability to raise the necessary funding in the credit crunch.
Private equity deals have slowed since last summer because banks have been reluctant to lend the large sums they had made available earlier in the year for such transactions.
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