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British insurer Resolution saw its share price hit a six-year high today, amid speculation that rival Standard Life could make a bid for the firm.

Speculation that Standard Life will make a £5 billion offer for the company in conjunction with Swiss Re has cast doubt on whether Resolution's planned merger with Friends Provident will take place.

The two companies announced plans in July to combine their operations, as part of a £8.6 billion deal.

Standard Life, which previously revealed that it was considering making a bid for Resolution, has until Thursday to make public any offer.

Rumours that the former mutual may make a mostly-cash offer of between 730p and 740p-a-share for Resolution saw the latter's share price reach its highest level since September 2001 in early trading.

While any offer from Standard Life could threaten the planned Friends Provident merger, it could also usurp further attempts by Resolution's largest shareholder to block the deal with its own bid.

On Friday Resolution rejected a 691p-a-share offer made by Pearl Assurance, stressing that the bid "significantly" undervalued its business. The offer for Resolution was the second to be put forward by Pearl, which owns a 16.5 per cent stake in the takeover target.

Rejecting the latest offer, Resolution chairman Clive Cowdery warned potential bidders that his company would only be diverted from its planned merger with Friends Provident "by a compelling offer".

Meanwhile Friends Provident was forced on Friday to deny reports that it had been planning a share issue to boost its finances if the Resolution deal failed.

In a statement the company's chief executive Philip Moore insisted that Friends Provident was "a strong group with good prospects for profitable growth".