PROVISIONAL LIQUIDATORS TAKE CONTROL OF AILING BERMUDA FIRE AND MARINE

PROVISIONAL LIQUIDATORS TAKE CONTROL OF AILING BERMUDA FIRE AND MARINE

Bermuda Fire and Marine Insurance Co., the oldest domestic insurance company in Bermuda, has been placed under the control of provisional liquidators.

The liquidators have found that the 90-year-old insurer was under heavy

pressure from creditors to repay debts. The company's board of directors voted to begin "winding up" the company this week, a move similar to a bankruptcy filing in the United States.The Supreme Court of Bermuda subsequently appointed two Ernst & Young partners, Gareth Hughes of London and Tony Joaquin of Bermuda, as provisional liquidators.

They will examine the insurer's finances to determine whether the company should be liquidated or whether creditors should be paid a portion of their claims under a "scheme of arrangement."

Bermuda Fire had $161.1 million in assets at the end of 1990 and $61.8 million at the end of 1991, according to its financial reports. Current figures were not available.

Creditors complain that Bermuda Fire was doomed when it spun off its healthy domestic business into BF&M Ltd., a new unit that operates independently and is not part of the liquidation.

Following the sale, Bermuda Fire's business consisted primarily of international insurance activities, including participation in risks written by London's H.S. Weavers (Underwriting) Agencies Ltd. during 1968 and 1983. Those risks absorbed heavy losses.

"It would appear that all the international insurance business, or the bad business, was left in the old company, and the new company got all the profitable business," said Burleigh Arnold, the liquidator of Transit Casualty Co., a failed insurer in Los Angeles. Transit is owed $22 million by Bermuda Fire.

Other major creditors include ITT Hartford Insurance Group, $33 million; Resolution Group, a subsidiary of Talegen Holdings Inc., formerly Crum & Forster Inc., $22 million; and the Federation of the Jewish Philanthropy, $10 million.