The founder of embattled Tradewise Underwriting Agencies (TUA) has resigned as chairman to set up a new insurance company.

James Humphreys has created Tradewise Insurance Company in Gibraltar. The company will write its own business and provide capacity to TUA's commercial motor division, Motor Trade Road Risks.

TUA has been under pressure since the end of 2000, when the former underwriter of its motor division, Highway, pulled out due to lack of capacity.

Another underwriting agent, Tradex, stepped in to offer temporary capacity but TUA was forced to cease accepting new motor business when the deal collapsed in July.

As a result, a dozen employees were made redundant.

Tradewise general manager Mike Tyler has replaced Humphreys as TUA company chairman.

Tyler welcomed the new deal and said the company's motor division is now open for new business and renewals.

He said: "It has been a horrible year for the insurance market.

"We have all been working hard to secure capacity and are now able to offer competitive premium rates to all our mainland agents.

"Tradewise has a dedicated team of agency managers who will be happy to discuss both existing and new potential relationships."

Under the new arrangement, TUA has decided that it will not be writing any new business in the Northern Irish motor market, where it has operated for three years.

Tyler said: "Ireland has a bad record for motor and as we were in the market for such as short time, we couldn't tell if we would make any money there."

The remainder of TUA's products, including property damage, liability and goods in transit, will continue to be underwritten by Lloyd's syndicates.

Tradewise started as a broker for Highway and was converted to an underwriting agency in 1996. Before its underwriting deals collapsed, the company's motor book was worth £12.5m.