SHARES in insurer Friends Life were boosted following details of a proposed merger with Aviva.

The two companies confirmed they are in advanced talks about a merger which would create the UK’s leading insurance, savings and asset management business by number of customers.

Friends Life said it was prepared to recommend the terms of Aviva’s offer, which values it at more than £5.5 billion, to its shareholders.

Friends Life was created in 2011 following the amalgamation of Friends Provident, the majority of Axa UK Life and Bupa Health Assurance.

Friends Provident was founded over a Bradford sweet shop in 1832. The former mutual, which floated in 2001, was acquired by Guernsey-based Resolution, headed by Clive Cowdery, in 2009 for £1.86 billion. Following their acquisition by Resolution, the businesses were rebranded to form Friends Life Group. providing pensions, investments and insurance and retirement income products.

Aviva group can trace its roots back to the 1800s as the S un Life Assurance Society formed in 1810.

The move by Aviva comes after a resurgence in its fortunes under chief executive Mark Wilson who took charge in January.. Since then he has cut hundreds of jobs and has disposed of several businesses as part of his turnaround strategy.

Aviva recently reported a four per cent rise in half-year operating profits to £1.05 billion.

It said customers in the combined group would benefit from being part of a stronger and more diversified group with a wider product range.

The combined business will have 16 million UK customers. Under the terms of the proposed offer, Friends Life shareholders would own about 26 per cent of the enlarged group.