Saga's insurance division - the largest business of the group - has been grappling with rising claims, which led to a half-year loss and a warning on full-year earnings in September.

Acromas currently underwrites about 25%-30% of Saga's insurance business, Saga said.

The underwriting business has been experiencing high levels of claims inflation - currently around 13% - increasing costs and hitting profitability.

Saga, which also sells cruise holidays, did not mention who it was in discussion with or a potential selling price.

The company's net debt was 721.3 million pounds ($895.3 million) as of July 31. ($1 = 0.8057 pounds)

(Reporting by Sinchita Mitra in Bengaluru; Editing by Rashmi Aich and Savio D'Souza)