Specialist Lloyd's insurer, Chaucer Holdings, will pull out of Mitsui Sumitomo's Syndicate 3210 in 2007 after a seven-year partnership.

Ewen Gilmour, chief executive of Chaucer, told Insurance Times that from next year Mitsui would become an independent managing agency.

Gilmour said: "Because Lloyd's is so complex it is often difficult for a small entity to set up its own £50m syndicate. Chaucer has that structure in place to provide managing agency services to third party insurance

companies to allow them to concentrate on the underwriting.

"But there comes a moment when that syndicate almost outgrows its parent."

Gilmour said that he expected to replace Mitsui with a third party arrangement next year but only "when the opportunity arises".

Last week the insurer signed a heads of agreement with Quanta and the senior underwriting team of Syndicate 4000 to form Pembroke Managing Agency.

It will provide managing agency services as well as 10% of Pembroke's capacity, which, Gilmour said, would increase in 2007 if Chaucer improved profits this year.

Chaucer will leave its Devonshire Square offices later this year after signing an agreement last week to relocate to Plantation Place.