Royal & Sunalliance (RSA) has dismissed reports that it has put its life arm up for sale following an admission by chief executive Bob Mendelsohn that it is reviewing the business.

An RSA spokesman said the review was concerned with ways of releasing surplus capital from the life business. He said: “There are a range of options and a sale is theoretically one, although we have not yet reached any decision.”

Mendelsohn scotched rumours of a potential sale at the presentation of the company's quarterly results, which showed a 22% increase in operating profits to £168m.

“We have not entered into any talks. We will look at a variety of alternatives before entering into talks,” he said.

Speculation in the financial press claimed GE Capital was in the race to buy RSA's life business, which had a premium income of £3.4bn in 2000. A spokesman for GE Capital rejected this suggestion and said: “We maintain an interest in expanding and developing our European insurance activities through organic growth and acquisitions.”

However, he would not name RSA as one of its intended takeover targets.