Legal & General on Cowdery's wanted list

Mr Cowdery, who floated his second Resolution vehicle last December after raising an initial £600m cash, 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." His investors have pledged to back him with up to £3bn.

L&G and the Lloyds-owned Clerical Medical and Scottish Widows are three of the more serious targets on a list of 25 companies that Mr Cowdery has discussed with investors and analysts.

Friends itself is believed to have formerly examined a merger with L&G, which also shares common shareholders with Resolution, including Schroders, Aviva and Standard Life. "The life assurance industry has been a source of no fun whatsoever for investors in the last 10 years and it's time to do something about that," Mr Cowdery said.

The 30pc of Friends investors that also hold shares in Resolution played a prominent role in pushing the board into talks with Mr Cowdery.

Sir Adrian Montague, the Friends chairman, twice rejected approaches from Resolution, pitched at 0.8 and 0.82 of a Resolution share, before accepting a deal that offers 0.9 of its shares for every one of Friends' and a number of other concessions.

Resolution shares fell 6¾ last night to 82¼p, valuing each Friends share at 74p. Friends slipped 2 to 73p.

Resolution is also offering a cash alternative of up to £500m at 79.4p per Friends share aimed mainly at the insurer's 740,000 private shareholders. Investors can take the cash alternative for their first 2,500 shares. Sir Adrian said this was one of the concessions among "a package of things" that persuaded the board to back the deal. Others were the increased price, Resolution's agreement to maintain Friends' £90m a year dividend – spread over a larger shareholder base – and the switch to a primary listing in London, where the Friends subsidiary should join the FTSE 100. The Resolution parent company will remain domiciled in tax-efficient Guernsey.

Mr Cowdery's highly incentivised Resolution team, which takes 10pc of any increase in value from a deal when a business it buys is sold or listed, has also agreed to raise the risk-free "hurdle rate" when evaluating extra value created. It is currently depressed by quantitative easing to an artificially low 0.5pc but will rise to about 4pc.

Mr Cowdery said: "As someone who is building a business on returning to the capital markets for finance it would be bloody stupid to benefit from a windfall against the interests of my core investors".

Although the deal has been struck at a chunky discount to Friends' 114p per share embedded value, Sir Adrian denied he was selling too cheaply.

"The transaction commands the support of not only the common shareholders but also independent shareholders," he said. "Clive's got a very big team here that is focused on netting big elephants."

Friends' existing management, chief executive Trevor Matthews, who earns £720,000 a year, and finance director Evelyn Bourke, on £385,000, will remain with the group. Neither are expected to receive large pay-outs under change of control clauses.

Friends plight was highlighted in half-year figures showing European Embedded Value underlying profit fell from £211m to £131m pre-tax.

One shareholder said investors felt Mr Cowdery offered better opportunities than the status quo. "Friends Provident shareholders have had a rather depressing time so they were in a grumpy sort of mood," he said.