Private equity firm CVC Capital Partners and the re-insurance group Swiss Re have come together to launch a bid for the lion's share of the insurance business of the Royal Bank of Scotland's (RBS) British insurance assets, according to a report in by the Sunday Times.

The report says that CVC had discussions with RBS last week and that the bid would value the RBS division, which includes household names Direct Line and Churchill, at over £6 billion ($10.41 billion).

The CVC Swiss Re partnership would need to shell out over £3 billion pounds for a 51-per cent stake. The Sunday Times said that the CVC bid is being led by Fred Watt, RBS's former chief financial officer. Watts had quit RBS in 2005, after a five-and-a-half year stint. He boarded CVC last year.

The bid reportedly includes RBS's insurance business including Privilege, Green Flag, UKI Partnerships and NIG.

RBS has been ravaged in the credit crisis, and is reported to be seeking a capital injection from the UK government, post which the government would be at the helm of the Edinburgh-based bank with a 60 per cent stake.

Reports suggest that the bank has been attempting to offload its insurance operations for around six months, and had put up the 'for sale' sign while announcing plans to raise £12 billion from shareholders to beef up its core capital.

RBS reportedly needs another £20 billion. Its chief executive Sir Fred Goodwin, and chairman Sir Tom McKillop would also leave the bank. RBS is the second-largest general insurer in the UK, with a staff of 18,000 staff. It is the UK's biggest insurer of cars, and has a large market share in travel, home and pet insurance. It covers around 2 million motorists overseas, and is the largest direct insurer in Spain.

Reports said that CVC would put up most of the capital for funding the deal, with Swiss Re underwriting the risk.

Luxembourg – based CVC has 19 offices across Europe. It's previous investments include Hozelock, Debenhams, Formula One, the Saga/AA brands and the Belgian postal service. CVC presently owns 49 companies globally, collectively employing around 376,000 people. It is reported to have 38 investments in Europe and 14 in Asia.

Swiss Re is based in Zurich, and operates across 25 countries, providing insurance to insurers, mainly for property and casualty, life and health insurance risk.

Direct Line, one of the targets of the bid, was founded in 1985 to sell insurance direct to motorists over the phone. It was backed with £20 million in funding from RBS. Churchill Insurance, on of the other part of RBS's insurance business, was launched in 1989 and acquired by RBS in 2003 for £1.1 billion.