Hugh Osmond’s Pearl Assurance group yesterday called on Resolution, the insurer, to halt its £8.6 billion agreed merger with Friends Provident, amid growing suggestions that shareholders on both sides are opposed to the deal.

Equipped with a cash and derivatives stake in Resolution of more than 11 per cent, Pearl called for a meeting with Clive Cowdery, Resolution’s chairman, to question the rationale for the merger and explore “alternative opportunities”.

The holding makes Pearl by far the biggest shareholder in Resolution, followed by DWS with less than 6 per cent.

Pearl, a specialist in managing closed life funds, made clear that it opposed the deal as it stood, amid suggestions that it might seek a merger of its own with Resolution.

One source close to Pearl said: “We are very much against the Friends deal. We see a lot of execution risk in this. We’re not convinced by the cost savings. We think they should concentrate on running a closed fund business.”

The source added: “We’d be willing to talk about putting our two businesses together. There’s a lot of good fit.”

Resolution said: “With regard to all shareholdings, Resolution has always been relentlessly focused on delivering shareholder value and we will listen to anything that creates this value.”

It is understood that Resolution is open to the idea of holding talks with Pearl and is prepared to consider abandoning the Friends deal. It is thought there has been contact between Mr Osmond and Mr Cowdery in the past.

At this stage it is believed that Resolution prefers the idea of pursing the Friends tie-up.

However, the arrival of Mr Osmond throws a spanner into the works of Resolution’s all-share agreed merger. It was unveiled just two days ago and hailed as creating a top-five player in the life and pensions market.

Some shareholders have questioned anticipated cost savings of £100 million, and raised concerns about a potential clash of cultures in the boardroom, which looks set to be dominated by Mr Cowdery and his Resolution executives.

“It’s a takeover in everything but name,” said one investor. “We worry that Friends’ chief executive, Philip Moore, said only recently that the two companies were incompatible.”

Pearl said it began buying shares in Resolution in April “because it believed Resolution represented a sound financial investment”.

It is thought that the bulk of its holding, thought to account for about 1.4 per cent of Resolution’s shares have been accumulated over the course of the past two days.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive