News that Prudential is still being stalked by Clive Cowdery’s Resolution set tongues wagging in the City once more this week.

Over the past three months Resolution’s share price has been on a rollercoaster.

When it acquired Friends Provident for £1.86 billion in November, optimistic investors were rubbing their hands together, but relegation from the FTSE 100 and a lack of new deals has seen Resolution written off….until this week.

There has been no shortage of commentators talking up the prospects for a flurry of mergers and acquisitions in the insurance sector, but fund managers are looking again at Resolution, because, put simply, it seems too cheap.

Nick Brind, fund manager at HIM Capital, is among them, having previously held Prudential and selling out of it in January, he has recently added Resolution to his portfolio.

He explains, ‘I was in Resolution Mark One and did very well out of it. You have an exceptionally intelligent management team there and there is a feeling that it is a piece of elastic that has been stretched too far.

‘It has performed so dismally in the past six to 12 months. Since they [Resolution] took over Friends Provident, it has massively underperformed.

'Either they will manage to merge or acquire or they will take the decision to close to new business.’

Like many, Brind also holds Legal & General but he maintains that there is money to be made in Resolution.

In the company’s results last month, Michael Biggs, chairman of Resolution alluded to the forthcoming shake out in the insurance sector when he said, ‘ We see 2010 as a decisive year for many financial services groups as they redefine their business models in the aftermath of the global financial crisis and in the face of increasing regulatory burdens.

‘Resolution is in dialogue with a number of the owners of UK life assurance and asset management businesses whilst, at the same time, remaining highly disciplined on delivering the mid-teens return we seek on behalf of public market investors.’

There is no doubting the company’s ambition and if recent market tattle in relation to Prudential UK is to believed, there is still time for Resolution to come good.

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