WHEN it comes to insurance, size matters and that’s the strategy Resolution is betting the farm on. After buying two insurers – Friends Provident and most of Axa’s UK life operations – it is clear that it’s now hunting down its next prey.

The question for investors is whether Resolution, founded by insurance entrepreneur Clive Cowdery in 2008, can buy his way to the top by putting together disparate brands to create a successful business with £10bn of embedded value by 2012.

Yesterday’s results, showing a pre-tax profit of £139m from a £7m loss the previous year with strong cash generation of £73m indicate that he is on his way. The numbers were buoyed by Friends Provident where sales were up 42 per cent at £458m proving Cowdery’s strategy thus far is working.

It’s a high risk bet however. Failure to achieve planned synergies, overpaying and not being able to secure the cash to fund its strategy are all potential stumbling blocks. But with regulatory changes set to force insurers to hold more capital, those with deep pockets will win as smaller rivals wither.