Allen & Allen Group's plans to acquire the renewal rights to First Alternative's non-standard motor book have collapsed, Insurance Times has learned.

Sources close to Allen & Allen said the deal, which could have added up to 20,000 policyholders to the motor broker's book, fell apart towards the end of 2006.

Insurance Times revealed (News 12 October) that Allen & Allen was to acquire the rights to renew First Alternative's book of non-standard business in October.

The book was thought to be worth approximately £15m in gross written premium and represent 20% of First Alternative's business.

Allen & Allen had expected to renew between 60% and 70% of the policies, worth in excess of £10m in premium.

According to sources, Allen & Allen was due to be entering the deal in partnership with Equity, which was recently acquired by Insurance Australia Group (IAG) for £570m.

But Equity chief executive Neil Utley said it had not progressed past the discussion stage.

Steve McPherson, Allen & Allen sales director ,declined to comment on the collapse of the deal.

A spokesman for First Alternative denied there had been a serious deal in the pipeline. Its parent company, HBOS, is due to merge First Alternative with sister company Esure later this year.

Allen & Allen Group is set to launch a new household division in the spring.

The division will target mid-to-high net worth household business. It aims to write approximately £5m GWP in the first year.