Tycoon Cowdery 'to make £2.8bn Axa offer'

Mr Cowdery's insurance buy-out vehicle Resolution hopes to create one of the UK's largest protection and group pensions businesses through the Axa deal.

The company confirmed on Friday evening that it was in talks with Axa but did not provide details on the cost or funding arrangements for any deal.

The Sunday Telegraph said Resolution planned to sound out its investors about their appetite for supporting a rights issue, while the paper added that the company was eyeing an even larger deal than the Axa acquisition.

Resolution, which bought Friends Provident for just under 2bn last year, is believed to have held discussions with up to nine companies since it was created in 2008.

It has said it expects to consolidate three or four businesses by the start of 2011 with a view to selling the group by the end of 2012, the Financial Times added.

A deal with Axa would give Resolution a presence in the annuities market, which Friends Provident did not have.

However, the cost savings stemming from the merger of the two businesses would inevitably involve job losses.

Axa UK has around 10 million UK customers and employs 11,000 staff in the UK, although the French insurer is expected to retain ownership of its UK wealth management business and retain a presence in the general insurance and healthcare markets in the UK.

It is known to have been keen to exit the mature UK life assurance market for some time. Bristol-based AXA Life was formed in 1997 after the merger of Sun Life Group and AXA Equity & Law.

Mr Cowdery's first investment vehicle, also called Resolution, was used to buy a string of life funds that had closed to new business, including Abbey National and Swiss Life.

He sold the company to Hugh Osmond's Pearl Group for close to 5bn at the end of 2007.