The UK life insurer Friends Provident Plc has rejected a sweetened offer from Clive Cowdery-owned insurer Resolution Ltd, a company focused on acquiring businesses in the life assurance, asset management, general insurance and financial sectors.

Friends Provident said in a statement to the London Stock Exchange (LSE) that the terms and structure of the proposal remain wholly inadequate, adding that it had terminated the discussions and sees no basis for further engagement with Resolution.

In a revised proposal  yesterday, Resolution had offered to buy the 177-year-old Friends Provident for 0.82 of its shares for each of Friends Provident share, valuing the Dorking-based company at £1.7 billion.The plan included a cash element of £500m.

Resolution also said it would pay an annual dividend to the insurer's shareholders in respect of 2009.

Mike Biggs, the chairman of Resolution, said, "We are putting forward proposals that we believe will be attractive to Friends Provident shareholders and allow Resolution to deliver consolidation in the UK life sector, to the benefit of all shareholders in the sector."

The insurer had on 13 July rejected an offering of 0.80 Resolution shares for every Friends Provident share.

Friends Provident, which is 20-per cent owned by 750,000 retail investors, has rejected Cowdery three times in the last month. The insurer, which said it agreed consolidation was necessary in the UK insurance market, made a counter-bid for Resolution on July 17 and was rejected by the buyout company.

Cowdery last week indicated that he could make a hostile bid for Friends Provident, saying that investors in Revolution are estimated to hold around 40 per cent of Friends' equity.

Analysts believe that Cowdery could now take his proposal straight to the shareholders.

Resolution ''is considering its position on the relative attraction of Friends Provident as compared to other opportunities,'' the Guernsey-based Resolution said in a separate statement yesterday.

Resolution said that under its proposals, the Friends Provident board would become the board of Resolution's UK holding company, to be named Friends Provident Holdings. This would be re-listed upon completion of Resolution's consolidation strategy and restructuring of the UK life insurance market.

Friends Provident Group plc is a UK-listed life and pensions company, originally founded in 1832 to alleviate the hardship of Quaker families facing misfortune.

Friends Provident's strategy today is to operate in markets where it can deploy its award-winning strengths in technology and service to gain competitive advantage. Since 2001, the company has developed strong offerings in pensions and protection.

Friends Provident International develops savings, investment and pensions products for a diverse range of markets including Hong Kong, the United Arab Emirates and Germany.

Resolution Ltd was formed by Cowdery following the sale of Resolution Plc, the closed life consolidator also headed by Cowdery until it was acquired by Pearl in 2007 (See: Pearl beats Standard life to acquire Resolution for £4.98 billion)

 Resolution plans to buy and merge at least three life insurance companies in the next two years and return the enlarged group to the stock markets by 2012. The firm raised £600 million from investors in an initial public offering in December 2008.

(Also see: British insurers Friends Provident and Resolution to merge)