Churchill could be bought by Direct Line for £1.5bn to create a British behemoth of direct insurance.
Churchill chief executive Martin Long confirmed he had received approaches from several potential buyers, it was reported, after previously insisting the nodding dog operation was not for sale.
Direct Line is thought to be the most likely suitor. Reports suggested the two parties had been in talks since October.
Churchill's owner Credit Suisse, Switzerland's second biggest bank, is thought to be planning a sale to outweigh poor performances in investment banking.
Direct Line's parent, the Royal Bank of Scotland group, declined to comment on the speculation, but a deal would have clear commercial benefits.
Churchill is eighth in the Insurance Times UK top 50 insurance groups and companies on a gross written premium less treaty of £660m.
Direct Line is ranked sixth on £1,466m.