Swiss Life mulls bid for Friends Prov unit

LONDON (Reuters) - Insurer Swiss Life is considering a bid for Lombard, the high-end insurance unit of Friends Provident , and is already conducting due diligence, sources familiar with the matter said on Friday.

"We are really at a very early stage. The non-binding (bids) are not due yet," one of the sources said.

Friends Provident, which said in January it could sell Lombard as part of a radical strategy overhaul, reiterated there were several parties interested, but gave no further comment.

Friends Chairman Adrian Montague said last month he expected first-round bids for the Luxembourg-based business in May.

Friends bought Lombard in 2005 for around 400 million pounds, including earnout clauses, to expand its international reach. Some analysts have valued the business at over 700 million, but bankers have been sceptical of Friends' ability to command a hefty premium in current market conditions.

"We definitely want to be number one in this market and we are on our way to get there, but I cannot comment on rumours," a spokesman for Swiss Life said.

Shares in Friends Provident recovered from earlier losses in line with a weak financial sector on Friday to close down 1 percent at 117.8p after the news.

Friends, Britain's smallest blue-chip life insurer, has been in the throes of a review since it failed to merge with rival Resolution last year and ousted its chief executive.

(Reporting by Clara Ferreira-Marques, Mathieu Robbins and Douwe Miedema)

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