SAO PAULO--U.S-based insurance company ACE Ltd. (ACE) is in exclusive talks to acquire Brazilian retail bank Itau Unibanco Holding SA's (ITUB, ITUB3.BR, ITBUB4.BR) high-risk insurance unit, local newspaper Valor Economico reported Wednesday.

The unit is valued at around 1.5 billion Brazilian reais ($681 million), the newspaper quoted an unnamed person close to the talks as saying.

Earlier this week, Itau Unibanco said it was in advanced talks to sell the unit but didn't disclose the name of the company interested.

ACE press officials couldn't be immediately reached for comment by The Wall Street Journal and a spokesman for Itau declined to comment.

Along with ACE, others international insurance companies, such as France's AXA SA (AXAHY, CS.FR) and Germany's HDI-Gerling, were interested in the unit, the report said.

The operation up for sale is a very small business for Itau, representing less than 1% of the bank's results.

Itau will keep its retail and personal-insurance units. The division offers policies for infrastructure projects, mainly in the oil-and-gas industry. One of its main clients is state-run oil company Petroleo Brasileiro SA (PBR, PETR3.BR, PETR4.BR), or Petrobras.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com

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