Friends Provident, the UK insurer subject to a merger proposal from Resolution, should sell its asset management subsidiary F&C and entrust its life funds to its rival following a takeover, according to a new research note.

Tim Young, an analyst at Collins Stewart, described F&C as "poorly performing" and said: "we can see significant advantage in exiting FCAM, redeploying the capital and in-housing Friends' life fund assets to the rapidly improving Resolution Asset Management."