The setback has come barely a month after Merrett announced that it had approached Lloyd's with an outline plan designed to secure its future and the future of the insurance syndicates that it managed. At the time Stephen Merrett, group chairman and a former deputy chairman of Lloyd's, said: 'The proposals are based on the formation of a new managing agency with substantially new shareholders which would acquire the business from the group.'
In the proposed deal it was widely believed that Travelers, one of the largest US general insurers, would be a key player. Travelers has recently agreed to a bid from Sanford Will's financial services group, Primerica. Travelers and Primerica would have taken a significant equity interest in the new Merrett company, possibly of more than 50 per cent. In return the Merrett group would underwrite risks for Travelers and Lloyd's syndicates.
But the deal was blocked by Primerica, whch felt that it was too complex at a time when Travelers had just been acquired and was being integrated into a larger financial services empire.
Merrett is desperate to maintain its position at Lloyd's following a mass exodus of underwriting members from its operations in the wake of large losses. It has been seeking to go forward with the same amount of capital next year as this year, amounting to pounds 384m, but needed an injection of pounds 200m to achieve that.