RBS Insurance (RBSI), Britain's number one motor insurer trading under the Direct Line and Churchill Brands, is up for sale to appease European regulators after a taxpayer-funded bailout of RBS during the 2008 crisis left it 83 percent state-owned.
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RBSI is valued on RBS's books at 4.3 billion pounds.
The newspaper said the offer had been made in the past few weeks. It also quoted a source close to RBS as saying it had received other expressions of interest in recent months and that despite plans to float the division, it was also open to a trade sale.
RBS had said it aimed to start offloading the unit, probably via a public share sale, in the second half of 2012.
The bank tried to sell the unit in 2008 but initially decided to exclude private equity firms from the sale process, even though they could be drawn to motor insurance for its high cash-generating potential.
RBS eventually relented in 2008 and entered talks with buyout firms but rejected a joint offer from CVC and Swiss Re
Spokesmen for both RBS and CVC declined to comment.
(Reporting by Kate Holton; Editing by Helen Massy-Beresford)