Stephen Merrett, a former deputy chairman of Lloyd's, and other executives pleaded with the Archer agency to take over the running of insurance syndicates still trading within the Merrett organisation.
But in a terse statement yesterday the Archer board said: 'Senior executives of the Merrett Group approached the Archer Group with a proposal that the management of the Merrett on-going syndicates should be assumed by Archer Group companies.
'Subsequent to brief discussions, the chief executive of the Merrett Group was informed on Tuesday of this week that the Archer Group was not interested in taking discussion further.'
The move marks a fresh blow and further humiliation for Mr Merrett, whose family started the business in 1935. Mr Merrett has been struggling to find new capital. Last month he and his group announced that they intended to form a new underwriting agency with the backing of outside investment, including the involvement of Travelers, one of the largest US general insurers.
But Travelers and its new parent company, Primerica, abandoned the plan because they decided that their business objectives were different. Mr Merrett is attempting to shore up his crumbling business empire after a mass exodus from his insurance syndicates of 1,500 underwriting members.
With the flight of individual investors in the wake of huge losses and a loss of confidence by Lloyd's professionals, the Merrett organisation sought a further pounds 200m of capital elsewhere.
With the failure to form an international link with overseas shareholders, the Merrett organisation is desperately seeking a merger with another underwriting agency. After the failure of the Archer merger the names mentioned that Merrett may be still talking to are Brockbank, Octavian or Sturge.
In September Mr Merrett stepped down as deputy chairman of Lloyd's, arguing that his own company 'faced challenges and opportunities' and he had decided to reduce his workload.