AIG was in the spotlight this week with traders speculating on a UK acquisition target for the insurance giant.

This time the subject was life insurance fund consolidator Resolution Group, as rumours that the company could receive a bid approach circulated through dealing floors.

On Monday, the shares rose to 662p on speculation that the £4.5bn business could be a target for AIG.

In November, Resolution admitted it was considering a sale or merger. However, traders have tended to point the finger at Italy's Generali as a likely partner.

So should AIG step forward, some traders would like to believe a bidding war could break out.

On the subject of takeover activity, Windsor surged 9% to 51p after directors launched a recommended 52.5p-per-share bid for the broker. The bid values the group at £33.7m.

Away from the consolidation front, stockbroker Shore Capital published a 'buy' note on Legal & General ahead of the publication of its fourth quarter new business figures last Thursday.

It said: "We anticipate a powerful set of figures, against a tough set of fourth quarter comparatives over the past few years, demonstrating to us the spread of Legal's distribution and product offering."

Shore Capital also issued a buy recommendation on Royal & SunAlliance. Shares in the insurer eased last week as dealers factored in an increased number of claims due to the recent storms.

As Insurance Times went to press Legal & General was trading at 160.5p and Royal & SunAlliance was trading at 163.5p . IT

Yvette Essen is stock market reporter for The Daily Telegraph