Trevor Matthews, the head of Standard Life’s UK business, has quit the Edinburgh-based insurer to become chief executive of Friends Provident, its embattled rival.

The 55-year-old Australian, hotly tipped as a contender for the top job at Standard Life, resigned yesterday. Friends confirmed that he will take over as chief executive.

Mr Matthews was the first choice of Sir Adrian Montague, the chairman of Friends Provident, who is poised to unveil the conclusions of a detailed strategic review of Britain’s fourth-largest insurer tomorrow. The arrival of Mr Matthews suggests that Friends has junked sale or break-up plans and elected to try to remain independent.

However, Mr Matthews may still face a takeover battle with JC Flowers, the American buyout firm, having made an informal approach worth about 175p a share in recent weeks.

Friends is also thought to be preparing to offload its 52 per cent stake in F&C Asset Management, the fund manager. This has been valued at about £700 million.

Friends’ advisers have been working on a strategic review since late last year, after the collapse of an £8.5 billion agreed merger deal with Resolution, the closed-life funds group run by Clive Cowdery. The end of that merger, which also saw Standard Life pitch in as a buyer for Resolution, cost Philip Moore, the previous chief executive of Friends, his job.

Losing Mr Matthews will be a blow to Standard Life. Along with David Nish, the finance director, he was in line to take over from Sandy Crombie, Standard’s chief executive, who could retire as early as February 2009. Sources have suggested that there has been tension between Mr Matthews and Mr Crombie. Mr Matthews’s departure might smooth the succession process.

Mr Matthews, who joined Standard Life in 2004, has been instrumental in the development of its life and pensions business.

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