* Provinzial Nordwest, Provinzial Rheinland to talk merger
* Merger talks between the two insurers to run to March 31
* Talks with other potential bidders ruled out in meantime
* Allianz mulled 2.25 bln eur for Nordwest -sources (Adds detail, background)
FRANKFURT, Dec 10 German public sector insurer Provinzial Nordwest will discuss merging with peer Provinzial Rheinland,in a potential blow to Nordwest suitor Allianz .
The two public sector insurers would explore a merger until March 31, the state premier of North Rhine-Westphalia said in a statement on Monday, having met with the insurers' owners.
"Talks with other interested parties will be ruled out until then," the statement said.
Financial sources have told Reuters Allianz may be ready to offer more than 2.25 billion euros ($2.91 billion) for Provinzial Nordwest, Germany's second-biggest public sector insurer.
But talk of a possible bid by market leader Allianz prompted opposition from Provinzial Nordwest employees and services trade union Verdi, which said 6,000 jobs could be at stake.
Germany's public sector banks and insurers have a special status under German law and traditionally have closed ranks to ward off any threat of influence from the private sector.
Provinzial Nordwest, which is owned by regional savings banks and local government authorities, has around 3 million customers, with premiums largely balanced between property-casualty and life insurance businesses, at 1.6 billion euros and 1.4 billion euros respectively. ($1 = 0.7735 euros) (Reporting by Jonathan Gould; Editing by David Cowell)