Allianz, the German insurance giant, is considering a £5bn takeover of the AA, one of Britain’s largest roadside assistance and membership organisations.

Allianz is among a small group of potential buyers that have held discussions with advisers to the AA about a possible deal, according to Sky News.

Banking sources said Allianz, which has a market capitalisation of more than €169bn (£144.6bn), has been in talks about a potential offer for several months.

However, they cautioned that the current state of negotiations and the likelihood of a transaction remain uncertain.

At least one other potential bidder has also recently shown interest in the AA, while private equity firms including EQT explored a possible acquisition earlier this year.

The AA’s owners, a consortium of three private equity firms, have been pursuing a dual-track process for most of the year. The alternative to a sale would be a return to the London Stock Exchange.

A flotation remains a viable option for 2027, with banks and other advisers already preparing to support the AA’s potential return to the stock market, where it was last listed in 2021.

Allianz already has a significant presence in the UK. It has owned LV=’s general insurance business for the past seven years and also operates Petplan, one of the country’s largest pet insurance providers.

Last month, Allianz agreed to pay $2.1bn (£1.5bn) to acquire HSBC’s insurance business in Singapore. In 2024, it also signed an agreement to become the title sponsor of Twickenham, the home of English rugby.

However, a definitive agreement for Allianz to acquire the AA is still understood to be some way off.

The discussions come as rival motoring services group RAC undertakes a similar strategic process, with a London listing understood to be its preferred option.

The AA has more than 16 million customers, including nearly 3.5 million members.