Zurich Financial Services has confirmed that it is in an "advanced stage of negotiations" to sell its asset manager, Zurich Scudder Investments, to Deutsche Bank.
Zurich said in a statement that it was interested in acquiring the Deutscher Herold and further insurance companies of Deutsche Bank in continental Europe.
It added that an integral part of the negotiations was a cooperation and distribution agreement between the two companies in the fields of insurance, asset management and banking to provide a full range of financial services to their respective customers.
However, Zurich said that it had decided not to sell Threadneedle, Britain's third-largest retail asset manager, with £11.3 billion (SFr27.4 billion) of assets under management.
It added that it was retaining Threadneedle because it was "closely integrated" into its British distribution network.
Over the last few years, Zurich has acquired a number of fund management companies, including Kemper and Scudder, Stevens and Clark, and Threadneedle in Britain, in a bid to establish a global fund management brand.
Integrating proved difficult
However, problems of integrating the companies, combined with poor performances, have proved more difficult than expected.
During the first six months of the year, the Zurich Financial Services group made a loss of $14 million (SFr23.11 million) in its asset management activities, compared with a profit of $84 million the previous year.
The group blamed restructuring costs and the weakness on the stock markets for the poor performance.
The Zurich statement said neither Zurich Financial Services nor Deutsche Bank would have any more to say until the negotiations were over. It gave no timetable for this but Zurich chairman and chief executive officer Rolf Hüppi said last week that news on this was due "soon".
Over the past year, the share price in Zurich Financial Services has fallen by more than 50 per cent. At the end of trading on Thursday, the price was SFr360.
swissinfo with agencies
In compliance with the JTI standards