filing its statutory financial returns for 1992, has filed a lawsuit against Transit Casualty (in receivership) at Bermuda Supreme Court.

Details were not being released by either party yesterday.

But the suit is believed to be in connection with the disastrous long-tail business written for Bermuda Fire and Marine by London underwriting agency H.S. Weavers (Underwriting) Agencies Limited Pool between 1968 and 1983.

Transit, a Missouri-based company which wrote nearly all types of property and casualty coverage and reinsured similar risks on a much smaller scale, is thought to be the largest single creditor of Weavers, which is in liquidation.

Transit was placed into receivership by the Missouri Department of Insurance on December 3, 1985, and is the US' largest property and casualty insurance insolvency.

Transit's local lawyer, Mr. Nigel Howcroft, of Appleby, Spurling & Kempe, said the company has been described as a "$4 billion insolvency'' in an official report on its financial position.

"It involves thousands of creditors and assets in the hundreds of millions of dollars,'' he said.

"It is public information that an action has been commenced involving Bermuda Fire & Marine Insurance Company and Transit Casualty but I am not at liberty to disclose the nature of the legal action.'' Meanwhile, the fiscal 1992 financial returns of Bermuda Fire & Marine Insurance, expected to be released within the next few weeks, will carry a qualifying statement from the its London auditors.

Bermuda Fire & Marine, which has extensive liabilities through its involvement with Weavers, was originally supposed to have filed its financial returns for the 12 months to December 31, 1992, with Bermuda's Registrar of Companies by June 30.

The company was granted a three-month extension -- not an uncommon allowance for Bermuda companies -- after auditors in London would not sign-off on its results but The Royal Gazette understands the company could not comply fully with its new deadline, which expired last Thursday.

The London manager of Bermuda Fire and Marine has had problems getting financial information from Weavers in order to satisfy its auditors.

"The company has been told by its agent in London that the auditor in London will not sign off on its results until they are complete, accurate and correct,'' said a source. "Unspoken reinsurance recoveries have not been fully taken into account.'' Bermuda Fire and Marine has been in run-off since selling its domestic business on September 5, 1991, for $56 million to a new company which was named BF&M, causing confusion on the Island.

The break-up of the company into what, effectively, is "good'' and "bad'' business has caused a lot of speculation among Bermuda's lawyers and other professionals about whether the deal would stand up in court if it was ever challenged.

Actuarial firm Tillinghast has been wrong in the past about the amount of reserves needed to meet Bermuda Fire & Marine's debts, the full extent of which are not known yet, and there is concern the company may not have enough funds to meet its obligations.

BF&M is quick to play down any speculation and has asserted that a fair market price was paid for Bermuda Fire & Marine Insurance's domestic business. BF&M Management, which manages Bermuda, Fire & Marine Insurance, is confident it has put enough reserves aside to meet commitments.

Bermuda Fire & Marine's chairman, the Hon. Charles Collis, is off the Island and could not be reached for comment.

TRANSIT LAWYER Mr. Nigel Howcroft: `A $4 billion insolvency'.