Friends Provident Group has firmly rejected an all-share takeover offer from Resolution on the grounds that it is not in the best interests of its shareholders.

In a letter to the Board of Resolution, the life insurance firm said the proposed terms of the all-share offer of 0.8 new Resolution shares for every Friends Provident share are wholly inadequate to compensate Friends Provident shareholders.

Friends Provident said the suggested exchange of its shares into Resolution shares would represent a very different type of investment for Friends Provident’s shareholders than that they hold today and one subject to very different risks.

Peter Timberlake, a spokesman at Friends Provident, said: "We issued a [statement] this morning rejecting the proposal as we don't think it offers any value for our shareholders."

The letter also stated the proposed terms offered by Resolution to Friends Provident shareholders would lead to little or no premium or uplift in value without a significant re-rating of the combined group, the majority of which would be represented by the insurer's existing businesses.

Timberlake said Friends Provident would continue to provide "leading-edge services" to its customers in the corporate pensions side of its business. He also said the firm had a strong franchise in the corporate pensions market, which would continue.