RSA Insurance Group Plc rose in London after Switzerland’s Zurich Insurance Group AG made a conditional offer to buy the company for about 5.6 billion pounds ($8.8 billion).

The shares increased 4.8 percent to 518.5 pence at 9:56 a.m., short of Zurich’s proposal of 550 pence a share. A firm bid is subject to issues including RSA’s pension deficit and regulatory matters, Zurich spokesman Riccardo Moretto said by telephone on Tuesday. U.K. regulators have given the Swiss insurer until Sept. 22 to make an offer, the companies said.

“The deal hasn’t been done yet,” said Stefan Schuermann, an analyst at Vontobel AG in Zurich. “The market sees this possibility of a lower price in case Zurich finds skeletons in the closet.”

The announcement, which comes amid turmoil in financial markets, ends a month of speculation about whether Zurich Insurance Chief Executive Officer Martin Senn, facing dwindling profits, would seek to acquire the company. The takeover, which would be the biggest for the insurance industry in Europe this year at the proposed price, has spurred speculation that buyouts in the European insurance industry, which have lagged behind those in the U.S., are about to gain momentum.

The two firms have differed on price, with RSA demanding at least 600 pence a share and Zurich offering about 525 pence, the Sunday Telegraph reported Aug. 5. A deal would include Zurich honoring an interim dividend of 3.5 pence a share announced this month, RSA said.

Pension Gap

RSA’s pension deficit of 3.1 billion pounds at the end of last year is among hurdles to a possible deal which has deterred some insurers from making formal offers in the past.

“We think this is a reasonable price,” said Ming Zhu, an analyst at Canaccord Genuity in London. “RSA made some strong progress in the first half of 2015. That provides some comfort to Zurich shareholders.”

Zurich’s purchase of RSA, its biggest since 2000, would allow it to expand in the U.K. and Latin America as well as access RSA’s profitable Scandinavian and Canadian units at a time when its own profit is in decline.

The company’s shares climbed 2.1 percent to 266.4 Swiss francs in Zurich, partly reversing four days of declines.

Zurich reiterated in May that it had $3 billion in cash to use for acquisitions or to return to shareholders. While Senn has said the purchase could bring significant benefits in terms of cost-savings and synergies, investors including Simon Wyss at Privatbank von Graffenried AG, have said shareholders will need convincing.

For RSA, which saw first-half profit surge 84 percent, the talks are capping a tumultuous two-year period which included an accounting scandal in Ireland, Simon Lee’s departure as CEO and a spate of asset disposals to shore up the balance sheet. Chief Executive Officer Stephen Hester, the former CEO of Royal Bank of Scotland Group Plc, took the reins last year.