BF&M chief executive officer Glenn Titterton wrangled yesterday with cross-examining lawyer Clare Montgomery on some of the core issues of the Bermuda Fire case: whether or not the company's reorganisation was consciously motivated by the spectres of bankruptcy and further deterioration.

Ms Montgomery represents liquidators Ernst & Young, who are suing in Supreme Court for damages over the company's 1993 collapse.

Bermuda Fire transferred its life insurance work to BF&M Life in December 1990.

Ms Montgomery suggested this move was to protect its policy-holders against the bankruptcy on the part of the rest of the company, which Mr. Titterton said was not something he was considering.

"The main reason from my perspective as a manager was to make life easier in dealing with overseas regulatory authorities,'' he said, adding that he understood the life company's assets regarding policy-holders were legally protected, and that "a liquidator could only have attacked a surplus declared by an actuary.'' He admitted that in the context of overall reorganisation, he knew that the life company would be protected from liquidators, adding: "It's not something I remember being actively discussed.'' "I suggest that all the senior people involved in reorganisation were concerned at the real prospect of liquidation, in relation to the general company,'' Ms Montgomery said.

Mr. Titterton said, "I have differences with that ... I don't see how professional firms could possibly have participated in that.'' On November 1, 1990, a letter was sent from then-CEO Cyril Rance to keep life company policyholders informed. Ms Montgomery asked, "Why did the letter make no reference to this being contemplated as part of a wider reorganisation?'' Mr. Titterton said he believed the formation of BF&M Life to be "quite capable of standing on its own''.

Ms Montgomery said, "Wasn't it equally important that the company be forthright with its policy-holders with respect to reorganisation in 1991?'' Mr. Titterton agreed, but was unable to respond when Ms Montgomery asked why no such letter was sent in 1991.

"I would have to go through all the documents sent out in 1991,'' he said.

"I thought what was done was very open with explanations.'' Ms Montgomery also cross-examined Mr. Titterton at some length as to his understanding, at the beginning of 1991, of the "Weavers Problem'' -- in-house shorthand for the company's problems with its international business.

Semantics have been a frequent point of contention in the case, as the closing argument attests. When Ms Montgomery segued from defining the Weavers problem to the question of Mr. Titterton's seeking reinsurance recoveries at the time, lawyer Elizabeth Gloster QC, who leads the corporate defence team, objected that the issue of the reinsurance "logjam'' had been laboured over several days. Puisne Judge Vincent Meerabux overruled her objection.

The court has heard that at the beginning of 1991, Graham Pewter of LCF Edmond de Rothschild Insurance indicated to Bermuda Fire accountant Irmgard Viera that Cologne Re was willing to underwrite a reinsurance contract giving cover to Bermuda Fire. Mr. Titterton has repeatedly insisted that a service was offered which Mrs. Viera examined as a feasibility study. "There was no conscious decision to set out to buy additional cover,'' Mr. Titterton said.

"I suggest that's simply not true,'' Ms Montgomery countered. "You told Coopers and Lines on the 28th of February (1991) that financial reinsurance was to be acquired for a third party over the next two weeks.'' "On several occasions during this trial I have said that is not my memory of this meeting, and I did not say that,'' Mr. Titterton replied.

He added: "I can live with the word `contemplation'. I can't live with the words `financial reinsurance is to be acquired' -- the process never reached that particular stage.'' Ms Montgomery then suggested that what Mr. Titterton contemplated was further deterioration of the company.

"You've suggested that several times,'' he answered, "and I did not.'' BUSINESS BUC