Britannic Assurance, which operates in the same sector, is believed to have held a meeting with its advisers, SBC Warburg, to discuss whether a takeover bid should be made.
The meeting was held shortly after details of the merger were announced by United Friendly and Refuge earlier this month.
Britannic, which already holds a 10 per cent stake in Refuge, is seen as a well-managed insurer in a sector plagued by the heavy cost of acquiring new business and collecting small premiums door-to-door.
One Refuge shareholder, who would not be named, said: "Britannic is a fabulous company. I would not be surprised if they weren't thinking about it. Any decision they take would be in the best interests of their shareholders." Another industry observer claimed: "Britannic is not holding a stake in Refuge just for the dividend income. This is a strategic holding. If Britannic saw there were a number of other shareholders who might be interested they could form [some deal]."
Despite a meeting with Refuge yesterday to hear details of the merger, Britannic fund managers are believed to beundecided whether they are acceptable.
Even so, some sources played down the likelihood of a last-ditch Britannic bid.
John Cudworth, chief executive at Refuge, declined to say whether a meeting had taken place with Britannic. He said: "No one has approached us [about a takeover]. I am confident [the shareholders' meeting] will go the way we think it should go on 9 September."
His comments follow a wrangle over the exact proportion of so-called "orphan assets", attributable to Refuge shareholders before the merger with United Friendly takes place.
One fund manager, Perpetual, which holds 7 per cent of Refuge's shares, believes a greater part of the surpluses accumulating in the insurer's funds since its formation in the mid-19th century, belong to shareholders.
The fund managers' argument, following advice from Alan Richards, a former insurance analyst at James Capel, is also based on a dispute over the value of Refuge's pension fund and how much of its surplus shareholders are entitled to.
Perpetual argues that although the distribution of orphan assets in the manner it wants was blocked by the Department of Trade and Industry, this was because Refuge failed to put its point strongly enough.
This is vehemently denied by Refuge and its advisers, Phoenix Securities, who say that extremely detailed discussions were held with the DTI over an 18-month period to arrive at the amount of assets distributable to shareholders.
Mr Richards said yesterday that he was working on compromise proposals for some shareholders whereby Refuge shares would be counted as having more value in the merger than at present.
In addition, Refuge shareholders would be allocated their proportion of additional orphan assets if they were freed by the DTI.