Euclidian managing director James Stuart will head up Euclidian Direct Ltd (EDL), the on-going broking business left after Syndicate 1243 went into run-off this week.

It is understood Stuart owns the majority stake in EDL and will carry on placing schemes, such as its caravans scheme, and specialist classes, worth £3m in gross written premiums, with its existing panel of insurers.

He is also ready to look at Euclidian's, as yet unlicensed, Gibraltar operation as a possible new underwriting agency for the business.

Marlborough Underwriting Agency will oversee the run-off of Euclidian Underwriting Ltd (EUL). Negotiations are still on-going with the capital providers, in particular Berkshire Hathaway, as to what will happen to the rest of the group's staff. But it is understood the majority of the senior management will not be offered positions at Marlborough.

This week's announcement brought to a close months of protracted merger talks with other managing agents such as Canopius and SVB. It is understood the talks broke down because Berkshire Hathaway wanted to sell the business as a going concern.

But sources said after seeing the business plan, Canopius offered to buy the business for £1.

In a statement, Euclidian said: "Negotiations with the major capital providers continue regarding the transfer of the management of the syndicate. The decision to place the syndicate into run-off is not expected to affect these negotiations."

A Lloyd's spokeswoman said: "We have been working closely with Euclidian throughout 2004 and we made it clear to it that securing long-term capital was a pre-requisite for continuing at Lloyd's."