Norwich Union rejected a £70m cash offer for high street broker, Hill House Hammond (HHH), just days before announcing the closure of all 240 branches.
The offer from rival Swinton Holdings was turned down in favour of selling the commercial arm (see box) and feeding the personal lines business into its direct operation. Norwich Union claimed the offer did not represent full value for the business.
A spokesman said: "We looked at all the options and offers available and ultimately the choice we made was the only one open to us. We didn't necessarily believe the sale option offered us the possibility to create value."
But industry analysts disputed the claim, saying £70m was a reasonable offer for the business, while offering the possibility of safeguarding the company's 2,100 jobs.
An HHH insider said: "I think £70m was within Norwich Union's expectations."
It is also understood that Premium Credit's estimated £50m credit facility has gone into run-off. Premium Credit chairman Graham Puttergill said: "The total volume of work we do with Norwich Union will not change."
The reason given by Norwich Union for the closure of HHH, which recorded a £2.4m pre-tax profit on commission income of £76m in 2002, were difficult trading conditions in a highly competitive and shrinking market.
But a source close to both Swinton and HHH said: "It is difficult to tell whether this is a matter of pride, or that Norwich Union did not want to sell to a competitor, or that it was just looking at boosting its direct operation at the expense of the broker market."
Negotiations between Swinton and Norwich Union were confirmed by Swinton chief executive Patrick Smith.
He said: "We believe we would have been able to preserve the majority of jobs."