(Bloomberg) -- Prudential Financial Inc. has emerged as the lead bidder for Hartford Financial Services Group Inc.'s individual life insurance business, which may sell for about $1 billion, said two people with knowledge of the matter.

The insurers are still weeks away from striking a deal, and the talks could fall apart, said one of the people, who spoke on the condition of anonymity because the discussions are private. Hartford said in March it would seek buyers for the unit. Protective Life Corp. is among the other companies that showed interest in the division, the people said.

Prudential, the No. 2 U.S. life insurer, is targeting return on equity of at least 13 percent next year. The insurer said this month it has about $4 billion in cash and short-term investments at the parent company and that most of the funds can be used to repay debt, be redeployed or support operations.

"The successful deployment of capital with an accretive impact on ROE is critical as is the improvement of our operating performance in our U.S. businesses," Prudential Chief Executive Officer John Strangfeld said in an Aug. 2 conference call.

Hartford CEO Liam McGee has been divesting units after billionaire investor John Paulson pressured him to improve results by narrowing his focus. McGee agreed last month to sell a broker-dealer unit to American International Group Inc. and earlier this year struck a deal to sell an individual-annuities distribution business to Forethought Financial Group Inc.

Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential, declined to comment yesterday, as did Eva Robertson at Birmingham, Alabama-based Protective.

Shares Advance

"It's our policy not to comment on market speculation," said Shannon Lapierre, a spokeswoman for Hartford.

Hartford jumped 29 cents, or 1.6 percent, to $18 in extended trading at 4:14 p.m. yesterday in New York. The insurer has climbed 9 percent this year, compared with the 8.1 percent advance for Prudential. MetLife Inc., the largest U.S. life insurer, has rallied 12 percent since Dec. 31.

The individual life unit had net income of $36 million in the second quarter, compared with $46 million a year earlier, Hartford said in a regulatory filing.

McGee has said he expects to reach a deal for the life unit by the end of this year. Hartford, based in the Connecticut city of the same name, will be more focused on property-casualty coverage after the asset sales.

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