More insurers on the menu for Resolution

Clive Cowdery's Resolution aims to add further life insurance businesses to its operations, including Legal & General, Clerical Medical and Scottish Widows. Cowdery has drawn up a list of 25 businesses that he would like to buy and combine and of those he said "There are around nine life companies that are suitable candidates for consolidation. We believe that within 18 months there will be three life companies that will have come together."

Cost-savings will be minimal as a result of this first purchase as Resolution will not be able to combine operations in the same way as it will with future additions. Cowdery has a number of willing backers for his plans and possible access to up to £3bn of funds for any purchases. Many of his investors are the same insurers implicated in the restructuring of the industry.

As a result of the successful bid for Friends Provident by Resolution shares in the latter fell yesterday by 7.5 per cent to 82.25p, valuing the takeover at £1.73bn, rather than its initial £1.83bn level. However although the City may be somewhat sceptical on the deal, the Resolution management team has every reason to be enthusiastic, taking 10 per cent of the gain in value of a business that is sold or listed on the stock market.

Plans are underway for Resolution itself to be listed on the London Stock Exchange, with Friends Provident as a subsidiary.

WHAT THEY ARE SAYING:Martin Flanagan in the Scotsman: "The takeover … has sparked a City guessing game over who may be next, though the £1.86 billion deal that brings these two together is not thought to be an insurance industry "game-changer" in itself. Sector analysts argue there are too few cost-cutting and revenue-spurring synergies between the bespoke buyout firm and the FTSE 100-quoted Friends Provident for that to be the case. However, the deal may prove seminal for what it might trigger in the sector over the next few years."

Paul J Davies in the Financial Times: "One big problem for Mr Cowdery is that his first foray has been played out in the public eye. All those on whose doors he might now knock have seen Resolution pushed into raising its price, giving them all hope that they can drive a harder bargain." ·