Cowdery takes a second look at Friends Provident

LONDON (Reuters) - Clive Cowdery is known as the man who makes the normally staid and impenetrable world of British life insurance look adventurous.

Two years after leaving would-be merger partner Friends Provident out in the cold, the former insurance broker turned zombie fund entrepreneur has returned with an audacious bid for the smallest of Britain's blue-chip insurers.

Friends Provident has rebuffed the new approach, saying the terms are inadequate, Cowdery's investment vehicle Resolution is opaque and a tie-up would hobble its management.

But Cowdery, 45, has a reputation as a determined negotiator and people who know him say he is unlikely to drop Friends Provident without a fight.

"Cowdery is tenacious and very determined. He is in the business of acquisitions and the investors that have backed him buy into his track record," said an insurance executive who had worked with Cowdery in the past.

Cowdery's backers include some of the U.K.'s top fund managers. Standard Life, Legal & General, Scottish Widows and M&G Investments all participated in Resolution's 600 million pound listing in December, a deal that ended several months of drought in London's primary market.

He is bidding for Friends Provident through listed acquisition vehicle Resolution. His previous business, Resolution PLC, was sold for almost 5 billion pounds ($8.1 billion) in 2008, yielding bumper returns for investors.

"Clive got quite a following after selling Resolution. The City has been waiting for him to unveil his next target," the insurance executive added.

OLD FOES

Resolution was banned from completing acquisitions when the Financial Services Authority, the British regulator, launched an investigation into issues relating to the sale.

But Cowdery and four other Resolution directors were cleared of any wrongdoing in May.

Cowdery founded Resolution with 500,000 pounds of his own money in 2003. It was the first of a new type of company to profit from the run-off of closed life insurance books known as zombie funds.

Through a series of mergers, Cowdery turned Resolution into a FTSE 100 insurance giant before selling the business to rival zombie insurance outfit Pearl.

A battle for control of Resolution PLC between Friends Provident, Standard Life and Pearl pitted Cowdery against an old rival in the form of Pearl boss Hugh Osmond.

The first attempted tie-up between Resolution PLC and Friends, a nil premium all-share merger announced in July 2007, was scuppered as Pearl built up a large stake in Resolution and questioned the rationale for a deal with Friends.

Pearl then launched its own bid for Resolution PLC, beating out offers from both Friends and Standard Life and establishing Osmond as the king of the zombie funds in the immediate aftermath of the deal.

Osmond geared up Pearl to acquire Resolution PLC for 120 percent of embedded value, a measure of the present worth of an insurer's future cash flows.

Cowdery pocketed around 150 million pounds from the transaction, but the onset of the credit crunch meant that the backers of Pearl were not quite so lucky.

Unable to service its 3 billion debt mountain, Pearl was snapped up a few weeks ago by Cayman Islands-based Liberty Acquisitions in return for a 510 million pounds cash injection.

Liberty shareholders will own 60 percent of the new company, which will change its name to Pearl and intends to float on the London Stock Exchange.

Pearl's plan in the longer-term is to transform into a listed acquirer of distressed insurance assets, potentially reigniting the long-standing rivalry between Cowdery and Osmond.

($1=.6211 Pound)

(Editing by Jon Loades-Carter)