Royal & Sunalliance (R&SA) has denied claims that it has put in a £700m bid for Groupama Insurances, which is being sold by its French parent.

Insurance pundits named R&SA as a potential buyer for Groupama's UK business, along with insurance giants CGNU and Axa.

But managing director for R&SA UK commercial, Duncan Boyle, told Insurance Times: “We are not planning any major acquisitions in the UK. This is not true – it was a fictitious piece of journalism.”

He added the long-term strategy for R&SA was to grow organically, despite the recent acquisitions of collapsed insurer Independent Insurance's loss adjusting arm Property & Casualty Services (PCS).

Both CGNU and Axa have refused to comment on whether they will be putting in an offer for Groupama Insurances.

Groupama Insurances released a statement, saying: “While the UK Group understands the continuing interest in future ownership, the confidential nature of the sale process means it would be wholly inappropriate to offer any comment on market rumours and speculation.”

Lazards investment bank has been hired to auction off Groupama Insurances, one of Britain's top ten insurers.

AM Best Europe analyst Jose Sanchez-Crespo said: “Groupama is aiming for a strongly-rated company to take over its UK business, so the price it fetches will depend on the rating of the bidder.”

Groupama's decision to offload its UK operations is a result of its long-term strategy to concentate on banking in France. It is currently believed to be in talks with a number of French banks, including Banque Populaire and the Société Générale, with a view to establishing a partnership.

French mutual Groupama has confirmed the move is a result of its ambition to improve profits and join the bourse (the French stock exchange).

Groupama president Jean Baligand hinted at the company's intentions at the presentation of the group's results in May, when he said: “I think one day we will be bancassurers.”

The company also revealed it was keen to concentrate on operations in Southern, Central and Eastern Europe.

Despite the question mark over its future, Groupama recently relaunched its intermediary-sold fleet motor policy and has confirmed it will continue to support the UK operation until a buyer is found.