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Resolution is still engaged in takeover talks with fellow insurer Pearl, after its favoured suitor Standard Life abandoned its bid for the group.

Standard's Life initial bid for Resolution was welcomed by the takeover target last month, leading the latter to abandon its original plans to merge with fellow insurer Friends Provident.

However a subsequent offer made by Pearl, Resolution's largest shareholder, trumped Standard Life's bid.

Standard Life's decision to pull out of the acquisition race now brings Pearl a step closer to taking over Resolution, in which it holds a 24 per cent stake.

In a statement yesterday Standard Life said that although it was confident that it could have won the support of 50.1 per cent of Resolution shareholders for a restructured offer, it had concluded that a revised bid would "not create sufficient value" for its own investors at a level that was likely to be successful.

Responding to the announcement today Resolution said: "Resolution continues to engage with Pearl Group Limited regarding its cash offer for the company.

"A further announcement will be made in due course."

Standard Life's cash-and-share offer had been compromised by its falling share price, which widened the gap between its bid and the cash offer put forward by Pearl.

An earlier bid put forward by Pearl last month, before Standard Life made its approach, was rejected by Resolution on the grounds that it "significantly" undervalued its business.

But with tie-ups with Friends Provident and Standard Life now out of the question, the company has edged closer to a takeover of Resolution.