Standard Life looks to sell its Canadian insurance business

'Vastly improved' operation is to be reviewed by advisers UBS and Merrill Lynch

Standard Life, the Edinburgh-based insurer which last week announced that David Nish would be its new chief executive, is believed to have asked its advisers to review the company's Canadian business with a view to a possible sale.

Mr Nish takes over the helm from departing chief executive Sir Sandy Crombie in January, and it's thought that beside Standard Life Bank, which is likely to be sold to Barclays for as much as £300m, the company's Canadian operation could be sold too.

"Nothing has been decided yet but the Canadian business, which is vastly improved from what it was, could be sold off too," said a source. "Everyone needs some firepower in this market and Standard Life, which frankly looks a little vulnerable, could get it with a sale. But it's early days."

Standard Life's Canadian business posted a £102m loss in 2008 based on IFRS accounting standards, however, the business has since improved and Marcus Barnard, an analyst at Oriel Securities, forecasts the business will post underlying profits of £70m in 2010, based on the same standards.

Standard Life is advised by the investment banks Merrill Lynch and UBS. Mr Nish was chosen as chief executive last week after a tortuous process that began in February. It's believed that a number of high profile candidates, including Patrick Snowball, the former head of Aviva's UK business, and Nick Prettejohn, who quit Prudential as UK head earlier in the year, were offered the role, but declined.

Mr Nish, who has been granted a lucrative £3.3m salary and bonus package to re-ignite the company's fortunes, has been the driving force behind the sale of Standard Life's banking business. He also played a key role in Standard Life's abortive attempt to buy Resolution in 2007. The company was criticised by the Takeover Panel for its actions during the bid.

Nish takes over the top job at Standard Life as the industry's leading players wait for Resolution, the insurance consolidation group led by Clive Cowdery, to make its next move.

Resolution was granted approval from the regulator last Friday to complete its takeover of Friends Provident, the insurer which it agreed to buy in the summer for £1.86bn. Reports earlier in the month suggested that the Financial Services Authority was stalling over giving its blessing to the deal, but such concerns seem to have been unfounded.

The agreement means that Resolution, and Mr Cowdery, is now likely to pursue the company's next targets, with Lloyds insurance assets, Scottish Widows and Clerical Medical, thought to be the most likely. At a recent Merrill Lynch financial conference Mr Cowdery said that any future acquisitions would not be hostile.

Legal & General was reported last month to have asked its advisers to put together a defence document, in case of an approach from Mr Cowdery. A spokesman for Standard Life declined to comment.