YORK insurance giant Aviva has confirmed it is in advanced talks to buy Friends Life.

The potential merger would create the UK's leading insurance, savings and asset management business by number of customers.

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

Aviva said its board believed the combination would create the leading insurance and savings business in the UK with 16 million customers, who stood to benefit from being part of a stronger and more diversified group with a wider product range.

"In line with Aviva’s true customer composite strategy, Friends Life’s 5 million customers will benefit from Aviva’s product offer in general insurance, health, and asset management as well as life insurance," it said.

A spokeswoman said it was far too early to talk about any possible implications for jobs.

Friends Life issued a separate statement confirming that its board had agreed to recommend the offer to investors.

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

The businesses were rebranded to form Friends Life Group, providing pensions, investments and insurance and retirement income products.