Stockwatch

Friends Provident’s share price remained flat in the week after Resolution made its fourth bid for the life insurer since the beginning of July. The £1.86bn takeover offer has now been backed by Friends. The terms are 0.9 Resolution shares for each Friends Provident share.

Resolution is a Guernsey-domiciled investment firm, set up by insurance tycoon Clive Cowdery to acquire under-performing financial services firms.

The agreement may represent the beginning of market change and spark a further flurry of consolidation in the life sector, according to Moody’s. “The market still contains a relatively high number of players, some of which appear sub-scale and which should, given market dynamics, be likely candidates for consolidation or exit,” a Moody’s credit outlook report said.

Further, M&A activity could also spread over to the banks, particularly those who have received state aid. They will be looking to ditch insurance subsidiaries or any other non-core assets, Moody’s said.

The announcement came as Friends Provident unveiled its half-year results ending 30 June 2009. On a European embedded value basis (an alternative accounting measure for life companies, which reflects expected future cash flows), the company reported a profit of £131m, but this was down from the £211m it reported in 2008.

Elsewhere, RSA’s share price saw the biggest slump on our LSE watchlist, dropping 6.40% to 120p per share. Hardy experienced the second biggest slump of 4.17% to 270p per share.