Investment company Resolution said today that insurer Friends Provident had brushed off its takeover advances.
Despite the initial rejection, the firm said it remained interested in making an offer for Friends.
Resolution is an investment firm set up by insurance tycoon Clive Cowdery to buy up under-performing financial services firms.
The firm said any offer it did put forward was likely to be mainly a share exchange, but with a partial cash element for Friends shareholders.
"Although Resolution's proposal was not considered to be acceptable by the board of Friends Provident, Resolution received constructive feedback from Friends Provident and its advisers and is considering its response," the firm said.
Resolution said it was assessing the possibility of consolidation with "a number of UK life assurance companies", including both listed and private companies.
Mr Cowdery sold his first company - the UK's biggest manager of closed life insurance funds, also called Resolution - to privately- owned Pearl in 2008.
He has since been linked with a number of insurers after raising £600 million from investors for potential deals.
Friends - which has a stock market value of £1.4 billion - has reportedly shunned the all-share approach due to concerns over the potential price as well as corporate governance at Guernsey-based Resolution.
The City regulator, the Financial Services Authority (FSA), said in March that it was investigating the actions of Resolution directors over the sale to Pearl, although the FSA cleared them in May.
As with much of the life insurance sector, Friends has suffered share price declines this year amid fears that falling markets could hit their capital reserves.
This could put dividend payments under threat, or even force it to raise more funds from shareholders.
Friends also registered a worse-than-expected 40 per cent plunge in first-quarter sales in the first three months of the year.
The firm racked up annual losses of £871 million after writing down the value of its stake in fund manager F&C. The holding has been distributed to shareholders after Friends failed to sell it last year.