Sky News has learnt that Phoenix, which is a consolidator of closed life assurance funds, is in tentative talks with Cinven, Guardian's owner, about a deal that would create a £70bn asset manager.

A takeover of Guardian would reunite Phoenix with roughly £1.7bn of pension annuity assets that it previously owned, but which it was forced to sell in an attempt to slash its huge debt-pile.

Phoenix, which has a market value of £1.9bn and now has net debt of £1.7bn, is not the only party in discussions with Cinven, according to people close to the situation.

Admin Re, with which Phoenix has held merger talks in the past, is also among the companies which has been examining a takeover of Guardian, they said.

CVC Capital Partners, the buyout firm, also expressed an interest in buying Guardian earlier this year.

Cinven is also exploring the possibility of a stock market flotation for Guardian, which would be likely to take place next year and which reports have suggested could value it at about £2bn.

The life assurer's current owner is understood to have identified a new chief executive to replace Jonathan Yates, who resigned earlier this year.

If Phoenix does secure a deal, it would cost well in excess of £1bn and underline the growing desire for consolidation across the UK's insurance sector.

City sources said Cinven would not make any decisions about Guardian's future before a decision by the insurance watchdog - expected in the coming weeks - about regulatory requirements for the industry under a framework called Solvency-II.

Phoenix has slashed its debt mountain from a peak of £3.5bn, and received a welcome boost during the summer when it was restored to an investment grade credit rating by Fitch Ratings.

Guardian manages roughly £18bn in assets on behalf of 695,000 customers in the UK and Ireland, while Phoenix has 5m policy-holders and £52bn in assets.

Phoenix has been examining a takeover of Guardian for some time, and its interest is understood to pre-date the appointment of Henry Staunton as its new chairman.

Mr Staunton replaced Sir Howard Davies, who has joined Royal Bank of Scotland in the same role just weeks after completing his Government-commissioned review of airport runway capacity in the south-east of England.

The approaches to buy Guardian come amid a shake-up in the annuities sector and other parts of the UK's life insurance and pensions industries following reforms announced by George Osborne, the Chancellor, in his Budget last year.

Annuities had effectively been mandatory for people with defined contribution pension schemes because of the tax implications, but the Government's changes to the rules have given consumers far greater flexibility.

So far this year, Aviva sealed a £5.2bn takeover of Friends Life, while Just Retirement and Partnership Assurance - also part-owned by Cinven - unveiled plans to merge during the summer.

Cinven bought Guardian towards the end of 2011 for £275m from Aegon, the Dutch financial services group, and has since made a series of further bolt-on acquisitions.

Those takeovers included Ark Life, which was sold by AIB in Ireland in December 2013, and two deals with Phoenix.

Last October, Guardian said the "financial profile of closed life funds is attractive ... due to their highly visible and very stable long-term cashflows and the potential for attractive returns on equity".

In 2012, CVC walked away from a takeover of Phoenix after weeks of talks, but insiders confirmed its ongoing interest in the sector.

Cinven and Phoenix both declined to comment on Wednesday.