Allianz SE is working to offload a large block of U.S. life insurance policies in a move that could free up several billion dollars in capital, people with knowledge of the matter said. 

Europe’s largest insurer is discussing a potential reinsurance deal for a portfolio with tens of billions of dollars in assets and liabilities, according to the people. It is working with advisers on the possible transaction, the people said, asking not to be identified because the information is private.

Such deals are attractive to insurers as it helps them manage risk. These insurance blocks have become popular targets for private equity buyers including Apollo Global Management Inc., which set up Athene Holding Ltd., and KKR & Co. as they seek to eke out returns in a low interest-rate environment. 

Blackstone Group Inc. and Carlyle Group Inc. have also been working to beef up their presence in the insurance industry as they seek to amass assets that can provide a steady stream of fees. A deal would come as Allianz contends with the fallout from lawsuits and U.S. probes into a group of funds that imploded a year ago, a matter that threatens to impact future earnings. 

Deliberations are ongoing, and details of the potential transaction could change, the people said. A representative for Allianz declined to comment. 

American International Group Inc. agreed in July to sell a stake in its life-insurance and retirement-services business to Blackstone, which will also manage some of the unit’s assets. U.S. insurer Prudential Financial Inc. said last week it would sell an annuities subsidiary for $1.5 billion to Carlyle-backed Fortitude Group Holdings LLC.