Merrett quits underwriting: Agency to shut main operations and sell off the rest

THE FORMAL demise of one of the most influential underwriting agencies in the Lloyd's of London insurance market took place yesterday as Merrett Holdings announced it was shutting its main underwriting operations and selling the rest.

The move followed months of speculation about Merrett, as well as a crisis of confidence that forced the chairman, Stephen Merrett, to resign as deputy chairman of the entire Lloyd's insurance market this autumn. The group's main insurance syndicate, 418, made large insurance losses.

Alan Cleary, the group chief executive who was appointed to the post only last week, said yesterday: 'Our most immediate priority is to resolve the difficulties of the underwriting division. It has therefore been decided to negotiate the sale of the goodwill in respect of syndicates 179 (non-marine), 332 (life), 1038 (non-marine) and 1184 (motor), which have strong support and excellent prospects.' Syndicate 1038 is to be sold to Venton Underwriting Agencies.

Mr Cleary said there had been considerable interest from a number of prospective purchasers, with talks at an advanced stage. 'Obviously, the terms will reflect the true value of the businesses and, ideally, provide a commitment to utilise certain group services such as information technology.'

However, a similar fate did not await the group's two main insurance syndicates, 418 and 1067, into which 3,500 underwriting members are grouped. Mr Cleary expressed the 'greatest possible regret' that these syndicates 'have not attracted sufficient capacity to enable them to go forward on a viable basis. We are therefore making the necessary arrangements for economic management of the open underwriting years, and the group has the expertise, the systems and experience to handle this activity in-house.'

Remaining in the Merrett group will be a range of companies providing insurance services and loss-adjusting facilities for other insurers. These are said to be unaffected by the group's difficulties at Lloyd's. However, there are likely to be redundancies across the board among the Merrett group's 350 employees.

Amid a range of boardroom changes, the role of Stephen Cane, group managing director, has been reduced. Mr Cane, who has been holding the fort following the departure of Dennis Purkiss, group chief executive, becomes chairman of the underwriting division.