Zurich Insurance, the Swiss insurer, sounded positive about a potential acquisition of the U.K.'s RSA, claiming the insurer would be a "complimentary fit" as it announced worse-than-expected second-quarter profits.
Martin Senn, chief executive of the insurer, said in a statement: "We believe that a transaction could bring significant benefits to us and to our investors in terms of the complementary fit of RSA's business with our own operations and in financial terms. But any capital deployment would need to meet the same hurdles that we apply to any other investment."
RSA CEO Stephen Hester told CNBC on Thursday that he could got not confirm if he had been contacted by Zurich Insurance, because of U.K. competition law.
The former chief executive of Royal Bank of Scotland did say that: "The only thing on the table right now is us continuing as a standalone company."
He added that RSA had not been "proactive" in searching out buyers, adding that there was "no evidence" that bigger insurance companies performed better than smaller ones.
"There is no evidence from the insurance industry that there is only one business model that succeeds (not about being big, small or medium-sized). There is no industrial imperative that says size or shape matters in this industry," Hester told CNBC.
On Thursday, Zurich Insurance announced net profit for the quarter down 1 percent year on the year to $840 million, lower than the expected rise to $944 million.
Its target, RSA, reported better-than-forecast pretax profits of £288 million ($450 million) for the first six months of the year.
"I have a very high opinion of the value we can create with this company, which is evidenced by today's results and we will be expecting a number of analyst upgrades," Hester, who was formerly chief executive of Royal Bank of Scotland, told CNBC.
"We think on a standalone basis, this leads to higher shareholder value. and I have a strong point of view that our job is to continue that shareholder value creation."
He conceded however that "It is possible there are synergies between RSA and Zurich."
The U.K. insurer is in the middle of a turnaround plan spearheaded by Hester.
The potential bid for RSA could be part of a wave of consolidation in the insurance sector.
—With contribution from CNBC's Katy Barnato.