Japanese insurer Tokio Marine has identified Australian insurer Suncorp as a preferred takeover target after reviewing several potential options, the Financial Times reported on Tuesday (Aug 25), citing people familiar with the matter.

Tokio Marine reviewed several takeover targets over the past months, including Insurance Australia Group and Suncorp, as well as Canada's Intact Financial Corp, the report said.

Two people with direct knowledge of the matter told the FT that Suncorp had emerged as the preferred target for the Berkshire Hathaway-backed Japanese insurer, with the Canadian general insurer deemed too large.

The sources warned that discussions were ongoing and there was no certainty a deal would result, the report said.

Suncorp and IAG declined to comment on the report, while Tokio Marine did not immediately respond to a Reuters request for comment. Reuters could not immediately confirm the report.

Shares of both Australian insurers jumped after the report, rising between five per cent and six per cent to lead gains on the benchmark ASX 200 index and the financials sub-index, which were up 0.6 per cent and 0.9 per cent, respectively.

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