The Royal Bank of Scotland (RBS) is looking to offload its insurance division, with US giant AIG touted as a potential buyer.

UK media reports last week said the bank plans to sell off non-core assets and raise £12 billion ($25.1 billion) from shareholders in the biggest rights issue in UK corporate history.

RBS insurance brands include UK household names Churchill and Direct Line, and the division is valued at between £4 billion ($8.4 billion) and £5 billion ($11.7 billion).

According to reports, AIG has held preliminary talks with the RBS about a deal which if transacted would see the commercial insurance giant make big inroads into UK personal lines.

Other major insurers are also likely to take interest. The RBS controls premiums worth over £5 billion ($11.7 billion), while Direct Line has more than 5 million customers.

The bank is Britain’s second-largest and is understood to be under pressure to improve liquidity after it acquired Dutch banking rival ABN Amro last year for £56 billion ($117.1 billion).

It has so far incurred £8.3 billion ($17.4 billion) in losses from after-tax subprime write-downs.