Mystery surrounds the fate of insolvent Bermuda captive Carolina Re which collapsed following an investigation into US based Fortress Re, the failed airline insurer with exclusively Japanese clients.

The Royal Gazette understands that Supervisor of Insurance Jeremy Cox is out of the office at the Bermuda Monetary Authority, and his assistant Shelby Weldon has not returned calls made this week. Carolina Re Liquidator John McKenna of Ernst & Young also failed to return calls this week.

But he told The Wall Street Journal earlier this month that he was investigating the company to see if any Bermuda insurance regulations had been broken.

It has been reported that North Carolina insurance company Fortress Re had ceded hundreds of millions of dollars to its Bermuda subsidiary, Carolina Re which went into liquidation last December.

Carolina Re then paid more than $400 million in dividends to its owners - who were also the principals of Fortress Re. When Japanese insurers on whose behalf Fortress Re had written insurance policies sought to recover claims stemming from a series of aviation disasters culminating in the September 11 terror attacks, they found that both Fortress and Carolina were insolvent.

Carolina Re which should have paid put an estimated $600 million had just $62 million in assets.