ZURICH -(Dow Jones)- Swiss insurance company Swiss Life AG (SLHN.VX) Friday said that it is considering the sale of its businesses in the Netherlands and Belgium, a sign that consolidation among Europan insurers is gathering pace.

Swiss Life, based in Zurich, said that the evaluation process is at an early stage, and that no decisions have been taken. The company also said that it doesn't plan to disclose any further information on the subject until a decision has been made.

Swiss Life shares ended higher Thursday on speculation that the insurer is eyeing a sale of these businesses, which could fetch as much as EUR1 billion.

Analysts expect interest for the businesses to be high. The Dutch business alone achieved sales of CHF827 million in the first half, an increase of 25% from the year earlier. It's only slightly smaller than Swiss Life's activities in France and Germany, its biggest markets outside Switzerland.

Possible buyers could include Dutch insurers Aegon NV (30370.AE) and Eureko BV (EUR.YY), analysts said. Aegon, through company spokesman Greg Tucker, declined to comment, while Eureko couldn't immediately be reached for comment.

A deal would follow the sale earlier this year of French insurer Axa SA's (AXA) Dutch insurance operations to SNS Reaal NV for EUR1.75 billion. The Netherlands-based bank and insurer is also seen a possible buyer for Swiss Life's businesses, but declined to comment.

Strong profits, fueled by steady prices for insurance policies and a virtual absence of large disaster claims, have given European insurers ample cash piles. Some of Western Europe's mature insurance markets are crowded, making the business less profitable. Also, the saturated European markets aren't growing fast anymore.

That's why analysts have long expected the industry to consolidate, with large company's like Germany's Allianz SE (AZ), Italy's Assicurazioni Generali SpA (G.MI), and France's Axa seen buying up smaller rivals.

"Selling the Belgium business makes sense, and has been anticipated," said Rene Locher, insurance analyst in Zurich with private bank Sal. Oppenheim. "Swiss Life had tried to grow the business through acquisitions, but deals failed to materialize, probably because the price tag was too high."

As a result, the business lacks critical mass, he said.

By contrast, a possible sale of the Dutch operations comes as a surprise.

Swiss Life's Dutch subsidiary, known as Zwitzerleven, has a strong position as the largest foreign life insurer in the Netherlands, an efficient distribution system through brokers, and a well-recognized brand.

Assuming a deal comes through, Swiss Life would probably want to invest the proceeds into expanding its operations in Germany and France, whose markets are growing more rapidly than the Dutch one, or the Swiss home market, Locher said.

Swiss Life shares initially rose on prospects of a deal, extending Thursday's gains on speculation that the insurer is eying such a sale. They later retraced much of the early increase, after analysts pointed out that the rumored EUR1 billion price tag for the business was probably too high.

At 0830 GMT, Swiss Life was up CHF0.25, or 0.1%, at CHF312, in an unchanged broader market. The stock has risen 5.3% so far this year, better than the sector average, which declined just under 1%.

With a market capitalization equivalent to $9.18 billion, Swiss Life ranks eleventh among European life and health insurers.

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