The news that Resolution, an acquisition vehicle setup to take over life companies, has made a bid for UK life office Friends Provident, could be the trigger for a fresh round of consolidation in the UK personal insurance sector.

Friends Provident has had to retrench in recent times, but the arrival of new chief executive Trevor Matthews, which it poached from Standard Life, was seen as a sign it was putting its house in order and Matthews has been credited with developing a profitable model.

So it is not surprising FP has reportedly rebuffed the Resolution approach, in what could be the first salvoes of a full-blown takeover battle.

Resolution has raised £600m in capital for takeover deals, with investors attracted by Clive Cowdery’s successful record in taking over life offices and squeezing out efficiencies.

According to reports, he should also be able to raise a further £3bn, which in the current climate would be an impressive display of firepower.

Resolution’s bid for Friends Provident could be part of a wider round of change across the life office sector.

Following the global financial crisis, a number of large financial groups are restructuring and European Union directives to impose tighter regulation on the finance sector could create additional pressures for change.

While firms like Resolution seek to gather assets and brands and rationalise them, others see break-ups as more likely.

At least one new fund has been set up to invest in small to medium-size insurance companies that stand to benefit from the forced breakup of large groups and a wider trend to more smaller, more specialist companies in the insurance sector.

The funds management industry has seen the rise of boutique fund managers, which concentrate on a particular style or a particular asset class.

In the future, as Europe has an increasing population of older workers, we are likely to see more boutique insurance firms offering niche products.

At the same time, the mid-level of the market could see more consolidation, with Resolution’s public bid for Friends Provident being an example of how this trend could develop.