Speculation was mounting this week over the future of Lloyd's syndicate 1607 after its main capital provider, Cigna, suddenly announced plans to withdraw from the London reinsurance market.

Cigna, which reinsures around £165m of accident and health from its London offices, issued a statement that it was quitting the London reinsurance market on its website last Friday.

But the American insurer has refused to quash market rumours that it would also withdraw backing from the Lloyd's syndicate Jonathan Thomas.

A US spokesman for Cigna told Insurance Times that the company had yet to decide whether to divest itself of 1607.

And a statement issued at the time of going to press said: "The status of that syndicate has not been determined".

The syndicate's managing agent Creechurch Underwriting was quick to deny that 1607 was being put into run-off.

Bruce Graham, the managing director of Creechurch Underwriting said: "It is not true [that 1607 has been placed into run-off]. There has been no change at all.

"There are bound to be rumours circulating around the market after Cigna's London office was placed into run off, and of course people are making assumptions about 1607.

"But it makes no sense for it [1607] to be put into run off. We have not heard from Cigna since the announcement, so I don't know what their long-term intentions are in terms of Lloyd's involvement. But if they were to withdraw, we would place the capital elsewhere."

Joe Mundy, Cigna's director of public affairs in the US, claimed the move to quit the London reinsurance market was part of a wider strategy by the firm to focus on the employee benefits market.

He said: "Reinsurance is really the last remnant of Cigna's old approach to the market as an 'all lines insurance company'."

Since the mid-1990s, the company has sold off several non-core businesses including, property and casualty, and domestic individual life.

Cigna also said that the rest of the company's primary insurance divisions in the UK will continue to operate and would not be placed in run-off.

Cigna's UK reinsurance division currently has around 30 staff in the UK with about half of those likely to be made redundant.