The insurer is looking healthier after a tough two years

Corvus Capital, an investment vehicle controlled by Andrew Regan, said it was in the early stages of considering an offer for the insurance giant.

Mr Regan is best known for his failed attempts to buy the Co-op in 1997.

Shares in RSA rose 5% last week, as speculation mounted, lifting its market value to �2.4bn ($4.36bn).

Royal & Sun has been fighting to get back on track since suffering an underwriting loss of �641m in the US two years ago.

The setback was followed by job cuts on both sides on the Atlantic.

In recent times RSA has enjoyed a comeback, trebling profits in the first three months of 2005 despite being hit by asbestos claims and compensation claims.

Thwarted bidder

Andrew Regan made a fortune after leaving school aged 17 and founding the Cadismark household products business.

His attempt to buy the Co-op collapsed after it was alleged that he had stolen �2.4m from a company he controlled to provide bribes to two CWS executives to agree a food supply contract.

Mr Regan was subsequently cleared of all charges after three trials over six years.

Since then Corvus has made it known that it wants to acquire "a sizeable company with a proven stable and strong cash generating business".

"Corvus continues to evaluate a number of potential investment and acquisition opportunities, of which RSA is one," a statement from the investment vehicle said.