Wellington Underwriting is understood to be on the market for an estimated £170m, Insurance Times has learned.

According to a number of senior Lloyd's sources, the managing agent has finally been put up for sale after years of speculation.

Wellington has vigorously denied the rumour.

Sources said that Wellington had been attempting to buy back third party capacity on its Syndicate 2020 in order to prime itself for a sale.

Last week, the company announced that it had acquired additional capacity, which took its participation up to 70.2% compared to 66.7% earlier this year.

Other market sources suggested that a Bermuda reinsurer looking to diversify its book in the London market, such as Montpelier Re, would be a likely bidder.

Lancashire has also been touted as a possible suitor, despite setting up its own FSA-approved insurance company in September.

If a deal could be struck, it would make either company the first Bermuda outfit to claim a significant stake in the Lloyd's market.

Wellington is regarded by many as the perfect vehicle for an offshore insurer because of its interest in high-end commercial business and its relatively low expense base.

It is seen as less attractive to an already established Lloyd's company given the amount of capacity in the Lloyd's market.