Hill House Hammond has been thwarted in its attempts to acquire the Newport firm John Henshall Insurance.
Henshall, a well known broker in the area, has agreed to a management buy-out led by four business partners.
One of them, Tony Conlon, said he was delighted they had managed to buck the trend of large brokers buying smaller firms.
The handover will safeguard 30 jobs in Newport and ensure the brokerage remains locally controlled.
“We want to maintain employment and the name of John Henshall in Newport and offer a friendly, local service to our clients,” said Conlon.
The management buy-out was organised when former owner John Henshall announced he wanted to step down from running the firm after 33 years. He has agreed to remain on as a consultant.
The deal was led by the three existing associate partners Bryan Cutter, Mark Freeman and Martin Pitchford, together with Conlon, a former associate.