Mortgage-related insurance provider Paymentshield has been touted as Towergate's £200m acquisition target.
The company, which is based in Southport, has been up for sale for months, according to sources.
It is understood the management team, which bought the company in 2004 with backing from HBOS, is looking for around £200m.
A Paymentshield spokeswoman said: "Over the past few months a flurry of activity and speculation has surrounded us because we put our underwriting contract out to tender.
"That tender is coming to an end and we are close to an announcement.
"As to Towergate or any other company's interest in our business, we have a policy not to discuss market speculation."
The company has 300 employees and sells its portfolio of MPPI insurance, and buildings and contents insurance through intermediaries.
Sources close to Towergate said the acquisition, which is a closely guarded secret, would be a complete "departure" from its present model.
