Irish Life is in exclusive negotiations to acquire Aviva Health, which was put up for sale late last year.

The Irish Times has learned that Irish Life entered exclusive talks on Friday to buy the health insurer, which has about 300,000 customers in the State.

Irish Life already owns as 49 per cent stake in GloHealth, the number four player in the market, and would be expected to merge the two businesses in time.

Irish Life is owned by Canadian financial group Great-West Lifeco. It contributed €204 million in profit last year to its Canadian parent, an increase of 11 per cent on 2014.

While Aviva has entered exclusive talks with Irish Life, the company could yet choose to retain ownership of its health insurance division and buy out AIB’s stake.

No comment on the talks was available from either Irish Life or Aviva.

Aviva appointed Macquarie in November to advise it on its strategic options for the business, which is a 70/30 joint venture with AIB. It is believed to have received 10 expressions of interest for the health business.

In 2014, Aviva Health had gross written premium of €330 million but profits declined by 34 per cent to €12 million. In the first half of 2015, its profits reduced to €2.6 million from €5.1 million a year earlier.

However, it is understood that its profitability recovered in the second half of the year.

Aviva employs 120 staff in its health insurance unit here, and is the third biggest health insurer in Ireland. It entered the market in 2008 with the purchase of a 70 per cent stake in Vivas Group, with AIB retaining ownership of the balance.

It ranks behind State-owned VHI and Laya Healthcare, which is owned by US financial giant AIG.

About half of its health business is generated from intermediaries and Aviva has outsourced the customer services and claims functions to Abtran in Cork.