The prospective deal appears to be part of the U.S. insurer's effort to shed overseas assets and manage risk, eDaily reported. It added that Prudential had picked Deutsche Bank as a lead manager, citing an unnamed banking source.

Spokesmen for both Prudential Investment & Securities and KB Financial Group told Reuters they had no knowledge of the talks.

KB, the parent company of top South Korean bank Kookmin, is set to raise 1 trillion won (488.4 million pounds) in a rights offering this month. Analysts believe the proceeds will be used to buy a securities house or insurance company to beef up the group's non-banking operations.

Prudential bought unlisted Prudential Investment & Securities in 2004. The brokerage swung to an 11 billion won loss in fiscal year 2008 ended March due to a sharp drop in stock markets, according to data from the Financial Supervisory Service.

Applying the current valuation of 2 times estimated book for South Korean brokerages, the possible sale would be worth 840 billion won, based on the unit's net asset price of 420 billion won at the end of July.

U.S. life insurers have been weakened by the global financial crisis, hurt by investment losses and higher costs on investment-linked retirement products that guarantee returns.

Prudential also runs a life insurance company and an asset manager in South Korea.

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)