Britain's Aviva says it is in talks to buy another insurer, Friends Life for over 5.6 billion pounds ($8.8 billion) in a deal that would create the country's leading insurance, savings and asset management company by number of customers.

The companies issued a statement Friday announcing they had reached agreement on the financial terms of a transaction under which Friends Life shareholders would receive 0.74 Aviva shares for each of their shares. The companies said the offer is equal to 398.9 pence a share, or 15 percent more than Friends Life closing share price Friday.

Friends Life says it is willing to recommend the deal to its shareholders, subject to agreement on other terms.

The companies say the deal would significantly increase cash flow and accelerate growth of Aviva's dividend.