The two put in offers last week, The Australian said, which would value Sovereign and Australia's CommInsure at more than A$4 billion.
The deadline to submit a bid was last Thursday.
It is expected that the bank will choose a preferred bidder this week and any resulting sale will happen quickly.
The Australian reported that sources said they believed AIA had won the contest.
It said it was thought CommInsure and the New Zealand Sovereign business were both being bought by AIA.
The Australian said US-based MetLife had expressed interest in Sovereign but pulled out to focus on ANZ's life business, instead. ANZ is also working through a process which could lead to the eventual sale of New Zealand's OnePath.
Russell Hutchinson, of Chatswood Consulting, earlier said New Zealand had a number of Australian-owned banks in this country had been questioning the ownership of their wealth businesses, he said, and that often included insurance.
“There have been well-publicised advice risk issues in Australia... generally they have been about the wealth businesses but some have been about insurance. Other times it’s about could we use this money better – the capital requirements of the bank rather than the performance of the individual unit.”
He said the future of a significant number of insurance companies was up in the air.
At least one Chinese party also showed interest in the ANZ’s assets, as local commentator David Whyte had signalled, but had been knocked back due to a lack of local experience, it was reported.
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