TRAVELERS WITHDRAWS FROM DEAL TO BUY STAKE IN LLOYD'S SYNDICATE

TRAVELERS WITHDRAWS FROM DEAL TO BUY STAKE IN LLOYD'S SYNDICATE

Travelers Corp. has pulled out of a consortium effort to buy a majority stake in Lloyd's of London syndicate Merrett Holdings PLC, a syndicate spokesman said Wednesday.

Had the deal gone through, Travelers and consortium members Marsh & McLennan Risk Capital and investment banker J.P. Morgan would have been the first U.S. corporate owners of a Lloyd's underwriting agency.Merrett Spokesman John Newton said Wednesday the deal was scratched because Primerica Corp., which is set to acquire the Travelers at the end of the year, ''decided there was so much to do in its own consolidation that it couldn't afford to be sidetracked by deal with Lloyd's."

Primerica obtained an initial 27 percent stake in Travelers last year through a $723 million investment that was expected to help Travelers recover

from underperforming real-estate holdings and catastrophe losses.

Travelers' officials - who have never confirmed the insurer's participation in the consortium - refused to comment.

Travelers' withdrawal from the deal leaves Merrett's future unclear.

The agency, the biggest at Lloyd's, has seen the exodus of a number of its investors, known as Names, who are personally liable for losses on any business underwritten on their behalf.

Merrett is being sued by two groups of Lloyd's investors - one group of Names claims losses of at least UK15.8 million (US $23.4 million) incurred on business underwritten by Merrett syndicate 421 in 1983. A separate lawsuit was filed by Names who put money behind Merrett's syndicate 418 in 1985.

A Lloyd's spokesman said Wednesday that a rival Lloyd's agency will likely take over Merrett, which is seeking a new owner in order to attract some of the corporate capital expected to enter the Lloyd's market at the beginning of 1994 under the Lloyd's business plan.