a fantastic trip for joint liquidator Mr. Charles Kempe through corruption, jury tampering, murder and handling claims like that of a husband who was injured in a fight as he tried to drag his wife out of a Californian lesbian bar.

Then there was the woman who claimed she injured herself while attempting to jump astride one of the dancers at a male strip joint named `Wet Willy's'.

But as the liquidation draws to a close, Mr. Kempe could tell members of the Bermuda Insurance Institute yesterday that the operation had been a success -- even if the patient died.

His faith in the United States judicial system already wavering, one of the low points for Mr. Charles Kempe came when he found himself in a Kansas City court seeking a judgment for $20 million to swell Mentor's almost dry coffers.

The liquidators had brought an action for fraud against a subsidiary of Financial Guardian Corporation and its two managers, Mr. James Wining and Mr.

William Schonecker.

But the case was thrown out by an allegedly crooked jury that was made up of "Missouri farmers, unemployed mechanics and liquor store sales clerks'', according to Mr. Kempe.

"All of our arguments and experts as to the finer and erudite points of the responsibilities of brokers and intermediaries failed when we were characterised by the defendant's lawyers as being operators from a jurisdiction to which people are welcome to flee in order to escape income tax and all sorts of obligations and responsibilities hallowed by the US Constitution,'' he said.

"In that case, we discovered evidence of jury tampering and, on appeal, we were fortunate to negotiate a settlement of $750,000, which more than covered our costs but not by a satisfying margin.

"In a subsequent case brought by Mutual of Omaha against Wining and Schonecker, the same issues were brought before a judge and the plaintiff was awarded $200 million.'' Mr. Kempe added: "Interestingly, Wining today is on probation and Schonecker is in prison. I assure you, I can give some fairly shrewd views on the litigation process in the United States following my experiences with Mentor.'' It was just one of the many frustrations that the liquidators encountered on an emotional roller-coaster of a ride to reclaim as much money as possible to pay off Mentor's billion dollar debts, said Mr. Kempe in a speech before the Bermuda Insurance Institute yesterday.

Taking the lid off the world's largest liquidation of an insurance company, Mr. Kempe said: "Every manoeuvre has been fraught with risk and the whole effort could be likened to the most physically and mentally wearying team event.

"Imagine a round the world yacht race that continued without a break 24 hours a day, day in-day out for six years -- from March of 1986 to March of 1992.'' One of the more sinister aspects of the process included the mysterious murder in Los Angeles of one of Mentor's recent former presidents, Mr. Norris Hayes, before the liquidators could interview him.

"His evidence was never obtained,'' said Mr. Kempe.

Above everything else, Mentor's liquidation proved to the rest of the world that the regulators and the professionals in Bermuda "have the willingness, the skills and, when necessary, the staying power together with the fundamental regulatory framework for dealing with this part of the life cycle of an insurance or reinsurance concern'', said Mr. Kempe.

Mentor was formed in Bermuda in the late 1960s as a wholly-owned subsidiary of Ocean Drilling & Exploration Company (ODECO), of New Orleans.

Like other captives, the company ran into major financial difficulties when it began writing third party business for tax reasons.

In January, 1985, the company stopped underwriting and unsuccessfully tried to cancel all of its current contracts.

"Taken three years earlier, this decision would probably have ensured the company's survival,'' said Mr. Kempe. "However, management wore its rose-coloured glasses resolutely to the end.'' Bermuda's regulators took steps to wind up the company in May, 1985, after deficiencies in Mentor's 1992 annual returns and the news that ODECO was attempting to transfer all of Mentor's files and assets to New Orleans.

Despite ODECO's protestations, Bermuda Supreme Court wound up the company a month later.

The company's records were rescued from the Civil Air Terminal and containers at the docks of both Bermuda and Jacksonville, Florida.

They showed that Mentor had written 4,600 reinsurance contracts comprising more than 13,000 underwriting years, had dealings with over 100 brokers worldwide and had managed to run up liabilities of between $800 million and $1.2 billion.

"At the time, there was a sizeable element of market doomsayers who were critical of the winding-up order and who prophesied that it heralded Bermuda's demise in the industry,'' said Mr. Kempe.

"But I can tell you today that the decisive action in June, 1985, by Bermuda's Ministry of Finance, the then-Minister Dr. Clarence James; his Financial Secretary, Mr. Mansfield Brock; and the Registrar of Companies, Mrs.

Verbena Daniels, has been proved to be the right one.'' After surviving an attempt by some creditors to have them removed, the liquidators came up with an overall strategy.

"That was, firstly, to determine the liability profile actuarially; secondly, commute all of the proportional and retrocessional reinsurances to the maximum extent possible, and then put in place a Scheme of Arrangement to bring the claims's filing process to a close,'' he said.

"And that is essentially what has happened over eight years, which is a relatively short period in reinsurance terms for a book of this size and nature.'' One of the most immediate and biggest battles was to sort out the legal mess that Mentor was caught up in, with the company a defendant in "hundreds of lawsuits''.

"The overwhelming and exhausting nature of these actions is indicated by the fact that, at the time we settled the actions in March, 1992, it was estimated that the trials alone would occupy the Supreme Court of Bermuda on a continuous basis for approximately one year and nine months,'' said Mr. Kempe.

On this point, Mr. Kempe said his experiences with Mentor had convinced him that arbitration of legal disputes "should be the process of last resort''.

"It saves no expense, usually enables one party to delay and frustrate, produces unsatisfactory or bizarre results with amazing regularity and provides no legal precedents for the future,'' he said.

"In my experience, there is no substitute for good old-fashioned commercial negotiation with no lawyers in the room or, failing that, a proper judicial solution. In my view, arbitration clauses are best left out of insurance contracts.'' After an "absolutely astonishing lack of interest'' among creditors and brokers, Mentor received a rush of 838 claims totalling $893 million when the liquidators set a deadline of May 31, 1989, for those wishing to benefit from a first dividend.

Adjudication of these claims took three years and resulted in the admission of 700 of them with a gross aggregate of $485 million.

After discounting, set-offs for Letters of Credit and other balances, this was reduced to $320 million and 25 cents on the dollar was distributed in March, 1992.

Remaining claims were then called for and, on June 30, 1993, Mentor's creditors agreed a Scheme of Arrangement which required creditors to value all their claims before June 30, 1993, and precluded any further claims submissions after that date.

Mr. Kempe said that creditors should ultimately receive "not less than 50 to 55 cents on the dollar''.

"I don't believe this is a bad result bearing in mind that, at the beginning of the piece, Mentor held just over $105 million in its treasury and had actuarially estimated outstanding liabilities of between $800 million and $1.2 billion,'' he said.

He expects to pay out all of the current $185 million of Mentor's liquid assets to admitted claimants before the end of 1994, retaining a sufficient amount to fund the collection of remaining reinsurances and enough to complete the liquidation.

Mr. Kempe concluded: "In Mentor's case, we have dealt with the entire world spectrum of insurance and reinsurance entities both as debtors and creditors and I believe we have discharged Bermuda's responsibilities to that community in an exemplary manner.

"This contention firms up considerably when one considers the insolvency performances of some of those states in the US which seek to tarnish our market's reputation and hobble our abilities to compete.

"It even looks good against events in the United Kingdom which is now grappling with its own reinsurance insolvency problems and, in my view, not very well in some cases.

"Bermuda's critics in this part of the insurance business cycle have been proved wide of the mark but I trust we will continue to rise to the ever changing demands placed upon us in this market.'' Mr. Charles Kempe.