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The reattribution saga embrioling Norwich Union is dragging on too long and could fall through soon, the insurer's chief executive has told an influential committee of MPs.

Mark Hodges, the head of UK life business for Norwich Union, appeared before the House of Commons Treasury select committee last week to justify delays in the potential reattribution of the insurer's £2.6bn inherited estate, which contains extra capital built up over generations.

Mr Hodges said he was confident he could reach a deal, but was forced to admit it was "by no means certain" because of "gaps" between the company's position and that of Clare Spottiswoode, policyholder advocate for Norwich Union.

A policyholder advocate is an independent representative who looks after the interests of the company's policyholders.

Mr Hodges he gave the strongest hint yet that a pullout from the talks could be on the cards by warning he wanted to "close the transaction in weeks rather than months".

Mr Hodges faced the committee alongside John Lister, chief actuary of Norwich Union as well as Nick Prettejohn, chief executive of Prudential UK and Nikki Maynard, tax director for Prudential.

Mr Hodges said: "If we cannot get to a conclusion that both the parties will allow we have to reach the unfortunate conclusion."

The MPs also grilled Mark Hodges over the current use of the inherited estate, particularly for dipping into it to cover mis-selling compensation costs.

Mr Hodges admitted the insurer had withdrawn £5.3m from the inherited estate for this purpose, but said it had not been used to pay fines incurred by mis-selling.

Nick Ainger, Carmarthen West & South Pembrokeshire Labour MP, said the practice effectively deprived customers of money.

"Policyholders stand to lose out from [NU] using this money to cover these costs," he added. "There is less money to be distributed to the policyholders as a result of this policy."

Colin Breed, south-east Cornwall Lib Dem Colin Breed, told Mr Hodges: "Your costs have been of a failure to do your business properly and you want the policyholders to cover the costs."

Mr Hodges replied: "Any mis-selling is regrettable and our prime concern is for the customers."

John McFall, West Dunbartonshire Labour MP and committee chairman, concluded the meeting with a veiled threat the insurer to move more quickly, saying: "There are many people depending on this. I would say from a distance, we will be watching."

Prudential have promised to announce whether or not they will also seek a reattribution by mid-2009, but Mr Prettejohn said last week the outcome of the Norwich Union case would have no bearing on the decision, saying: "There are limited parallels to be drawn."