The Financial Services Authority (FSA) did not force Lloyd's-based Cox Insurance to disclose its £125m losses from the World Trade Centre (WTC), according to retail division chief executive Neil Utley.

Last week the insurer rushed out a statement at 5.30pm on Thursday afternoon after its share price went into free fall, dropping 23% before the market closed.

The share price fell 10.5p, to close at 36p.

"There was no FSA intervention. The share price went down because of the market rumours surrounding the loss," said Utley.

But sources close to the FSA said Cox was on its watch list and the regulator "was not just sitting doing nothing" when there were major shifts in the market.

An FSA spokesman said: "We do not make statements on specific companies.

"Under the Financial Services and Markets Act, a listed company must release price sensitive information, which could affect its shareholders."

Utley said the reason the WTC estimate was so wrong was that Cox "based it on the best information we had at the time - mainly on the property losses".

Cox announced it would continue to write its profitable nuclear and aviation business this year, but would discontinue all other commercial underwriting, namely property and reinsurance.

"We weren't good enough at decision making," was Utley's verdict. He denied that the company was in takeover talks with another insurer.

"Nothing we are talking about now anyway," he said.

Cox commercial Syndicate 1208 has a capacity of £100m gross written premium, employing 80 to 100 people. The group said it would shed about 50 jobs from its total 2,000 employees over the next 12 months.