High net worth specialist Oak Underwriting was on the verge of being bought by Beazley but the deal collapsed, Insurance Times can reveal.

Beazley, which provides capacity to Oak, was understood to be preparing a £13.8m bid for the high net worth specialist, part of Somerville Holdings, before a deal fell through late last year.

Insurance Times reported rumours of a potential sale, which was denied by Somerville chairman Andrew Cross (News, 14 December 2006).

But sources close to the deal have confirmed that Beazley was set to buy the company, before the talks ended at the closing stages. It is not clear why the talks collapsed.

It is understood Beazley made the initial approach to buy Oak, which specialises in high value homes covering buildings, contents, fine art and antiques. It provides an estimated £20m annual capacity to the company.

This week Andrew Cross would not comment on whether the company had been in talks with Beazley, but he insisted that Oak was not for sale.

He told Insurance Times: "[Somerville] is committed to Oak's future and it remains committed to its future. There seems to be some sort of general feeding frenzy at the moment where those that look to fit the model suddenly become the subject of scrutiny."