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Friends Provident and insurance rival Resolution have announced changes to the terms of their planned merger.

Analysts say that the alterations mean that shareholders owning just 50 per cent of the stock in Resolution will now be required to approve the deal in order for it to go ahead. Under previous terms support had been needed from 75 per cent of shareholders.

Friends Provident and Resolution first announced plans to merge their operations in July, with the £8.6 billion deal set to create the fifth largest UK-listed life insurer if it is approved by investors.

The latest announcement comes after Peal Assurance said last week that it had received approval from the Financial Services Authority (FSA) to raise its stake in Resolution to as much as 20 per cent.

Resolution's biggest shareholder has said that the planned merger between the company and Friends Provident "isn't attractive" for investors and has hinted that it might make a bid for Resolution itself.

However Resolution and Friends Provident are pressing ahead with their plans to create a new group, Friends Financial.

In a joint statement issued by the companies, Resolution group chief executive Mike Biggs said: "The actions that we have announced today, along with the restructuring of the merger, demonstrate our commitment to the merger and reinforce the strong growth and value we expect to create from Friends Financial.

"The restructuring of the merger is in the best interests of our shareholders as a whole, as it allows the transaction to proceed without disruption, in the absence of any competing offer for Resolution," he added.

However Mr Biggs stressed that Resolution was "relentlessly focused" on maximising value for its shareholders and said that nothing in the restructuring agreement would prevent another party from coming forward with a rival offer for the group.

Friends Provident chief executive Philip Moore said: "We remain focused on successfully completing this merger and our announcement today highlights the detailed work that is taking place to ensure that the best possible value opportunities are realised, and that shareholders are given full opportunity to benefit from them."