Despite Aviva's rejection of the 5bn offer for its general insurance division, it failed to squash bid speculation asanalysts speculated that More Than insurer RSA could come back with a higher offer.
They suggested RSA might have to raise its offer by several hundred million pounds if it is to succeed.
"We think such a deal could make strategic sense. There would be significant overlap in the UK, Ireland and Canada and where RSA would have market-leading positions," said analysts at UBS.
RSA said it remained open to talks with Aviva, but declined to comment on whether it might raise its offer.
"RSA considers that its proposal represents fair value for the target businesses and would be in the interests of both sets of shareholders," it said in a statement, adding the deal could generate 300m in annual cost synergies before tax.
But Aviva rebuffed the approach.
"Given the compelling strategic and financial benefits to Aviva shareholders of retaining the general insurance business, its upside potential and the terms offered by RSA, the board was unanimous in rejecting this proposal," said Aviva chairman Colin Sharman.
Aviva also pointed out that a 21 per cent rise in half-year operating profit to 1.3bn showed it was in good shape.
But RSA said in reply: "Aviva's returns on equity have been behind those of certain other UK insurers in the last three years and are reflected in its low PE multiples." RSA's bid for the Aviva businesses would have been funded by a rights issue.
Aviva, the UK's second-biggest insurer by market value, regards its general insurance arm as a key source of cash to fund growth in its life insurance division. The company is Britain's only major composite insurer, running both life and general insurance businesses.
Aviva's general insurance business employs 600 people in Yorkshire, based in Leeds, Sheffield and York.
The region is mostly concentrated on the life business which employs 2,325 in York, 1,454 in Sheffield and 22 in Leeds.
Aviva's UK chief executive Mark Hodges is upbeat about the group's prospects. "We are confident about the future, " he said. "We have a very diversified business in terms of global diversification."