Ping An has sounded out the Chinese government about whether it would support the deal, a source familiar with the matter told Bloomberg.
Another source, who also wished to remain anonymous, told the newswire that the Shenzhen-based insurer has discussed financial options with banks.
Deliberations are reportedly at an early stage and Prudential in the UK has not yet been approached.
When contacted by Bloomberg, both firms declined to comment.
Potential £40bn pricetag
Prudential’s Asia business, which includes asset manager Eastspring, could be valued at £40bn ($51.5bn, €44.4bn), according to investment bank and broker Panmure Gordon & Co.
Speaking to the newswire, Panmure analyst Barrie Cornes said the deal would, by a considerable margin, mark Ping An’s biggest-ever acquisition.
Prudential unsurprised by interest
Prudential chief executive Mike Wells told British newspaper the Telegraph that he is “not surprised” the firm’s Asia arm is drawing such attention.
In the company’s half-year financial results, released on 9 August, the group’s performance was described as “again [being] led by Asia”.
The interest comes as it is in the process of spinning out its UK and Europe business, M&G Prudential.
Chinese insurance issues
While Ping An has reportedly contacted the Chinese government to sound it out on the idea, the recent events around rival Anbang could put the deal in jeopardy.
Having gone on an extravagant overseas shopping spree, which included buying New York’s Waldorf Astoria hotel, the Chinese regulator seized control of Anbang in February 2018 and nationalised it in June.
There were concerns about corruption in the sector, with Anbang forced to make a statement illustrating its cash reserves to rebut rumours it was taking risky loans.
Anbang chairman Wu Xiaohui was sentenced to 18 years in prison for fraud and embezzlement in April 2018, which he has appealed.
Anbang will remain under the control of the China Insurance Regulatory Commission (Circ) for at least a year.