Sources say Euclidian is set to merge with rival Marlborough, as Capital float founders

Euclidian could be set for a merger with rival Lloyd's managing agent Marlborough, according to sources close to Capital Insurance Holdings.

Capital, which owns Euclidian, is partly owned by Berkshire Hathaway, which also owns Marlborough.

Earlier this year, a £125m float of Capital was abandoned after the company failed to raise sufficient capital from UK fund managers. Capital was planning to use money raised from the float to consolidate the Lloyd's market by acquiring vehicles through its subsidiary Euclidian.

Market sources said this week that Capital had abandoned its prospective float despite reports that the plan could be resurrected this month.

But Capital founder Michael Wade told Insurance Times this week that, though the company would not list this month, he had "not given up" on the float, and that it was still one of a number of options under consideration.

Wade said there had been a number of "third party" approaches for Euclidian, but declined to name the companies involved. He said: "There have been a number of third party approaches for the business, which we are not pursuing."

SVB is understood to have been one of the third parties to consider a bid for the company, while a source close to Capital said merging Euclidian with Marlborough was "a possibility".

Kiln was also touted as a possible buyer by sources close to Euclidian. A Kiln spokesman said it would not comment on market speculation.

Marlborough was unavailable for comment when Insurance Times went to press.

Last year, in a speech to the Insurance Institute of London, Wade proposed the idea of bringing together Integrated Lloyd's Vehicles (ILVs) to create the "third stock" in the UK-based listed insurance sector, behind Aviva and Royal & SunAlliance.

He said: "The opportunity is to bring together a number of these ILVs and create at least one 'must have' stock for fund managers - one that they will support through the cycles."