Insurance groups Friends Provident and Resolution have revealed a last-minute sweetener in support of their merger by promising shareholders £1 billion next year. Will this be enough to fight off competition from Pearl and Standard Life?

The Takeover Panel has given bidders until tomorrow night to table full offers for Resolution to rival the proposed £8.5 billion merger.

Pearl has already seen its £4.8 billion proposal rejected by its target, but it is expected to make a higher bid by Thursday.

Standard Life is also considering a potential bid. Insurance group Swiss Re recently revealed that it has spoken with Standard Life about buying parts of Resolution should the Scottish group succeed in its bid.

Votes on the merger with Friends Provident will be counted in less than a fortnight. The proposed venture, to be called Friends Financial, said it may give shareholders more cash by April 2009, on top of the £1 billion earmarked next year. This would be financed by selling certain lower return assets.

The merger is also expected to generate at least £100 million of annual costs savings.

Friends Provident today revealed a 13% rise in UK new business sales to £3.4 billion in the first nine months of the year.

Group pensions drove the improvement, up 22% to £1.99 billion, while annuity sales were ahead 12% at £210 million. But a weaker mortgage market saw protection sales slip 3% to £311 million.

Shares in Friends Provident were up 1% to 175.3p in early morning trade today. Resolution retreated by a similar amount to 710.5p.