Lloyd's has launched an investigation into details of the takeover deal between rival managing agents Wellington and Catlin, Insurance Times has learned.

The corporation is understood to be looking at whether the insurers were in talks with one another when Wellington participated in three Lloyd's capacity auctions for the 2007 year of account in September.

In total, the insurer bought £29m worth of capacity on Wellington Syndicate 2020 from third party investors for an average price of 3p per £1 of capacity.

A number of Names, who sold their capacity at auction, are said to be "very disgruntled" after Catlin offered remaining investors 50p per £1 of capacity as part of its takeover deal.

One industry source told Insurance Times that if Wellington was aware of a takeover approach it should have been disclosed.

He added: "It will be difficult for Lloyd's to prove, but there are a lot of disgruntled Names who may consider taking action irrespective of what Lloyd's does."

Investigating activities following capacity auctions is "standard practice" for the corporation's auction division.

But one senior Lloyd's figure said if it could prove Wellington had information about Catlin's offer at the time of buying capacity, and that this was material, action could be taken against the insurer.

Wellington was unavailable for comment.