Ward Evans' debts could have reached £5m at the time of its collapse in December 2002.
It is understood at least £3.5m was owed to insurers, with a further £1.5m in bank loans and a £2.2m annual directors' wage and pension bill.
Giles Insurance Brokers, with 13 branches, is said to have paid about £800,000 for the collapsed business after five days of negotiations.
The purchase, Giles' seventeenth since 1995, has pushed forward its planned stock market flotation from 2006 to 2005.
Chairman Nick Giles, chief executive Chris Giles and new chief operating officer Paul Thomson have set up two new companies in London and Leeds, both called Giles Corporate, to handle the Ward Evans business.
Senior Ward Evans employees Mike Mortimer, Julian Connor, Paul Dempsey, Darren Rigg, Richard Evans, Sandeep Sharma and Philip and Andrew Lamb will own shares in the new companies and remain as directors.
Giles retained 30 jobs at Ward Evans and paid all staff salaries from
1 December 2002. It plans to take on a further 30 sales staff in 2003.
Giles will send legal letters to all former Ward Evans sales staff, enforcing their restrictive covenants, after some started poaching business.
"We've bought the goodwill and will stop at nothing to protect it," Thomson said.
"There'll be no easy wins at our expense."