their local office counterparts to put together alternative risk transfer market cover against an increase in liabilities.

Sedgwick's latest earnings report notes that the company needed additional cover to protect itself against a potential 62-million ($100-million) increase in liabilities relating to the selling of pension products.

The brokers were able to obtain that cover through Bermuda and London insurers and reinsurers at a cost that is included in the 80-million charge that erased profits for the first six months.

An initial layer of cover fortifies the firm against an increase of up to 37 million, excess of 80 million up to 117 million, in meeting their potential liabilities.

Sedgwick also obtained an option to extend the cover, providing a further 25 million of protection, up to 142 million.

The final costs are contingent on factors such as falling long-term interest rates and final guidance from the Financial Services Authority later this year.

The reserving exercise led to a 7.1-million loss for the half year. It came after the UK government accused the insurance industry of luring unsuspecting pension contributors away from company plans to more costly and lower paying pension plans earlier this decade.

The UK ruled that the industry must pay the clients gains they could have made under their previous plans. A number of companies are affected.

Sedgwick chairman Sax Riley is quoted as saying: "This issue is not peculiar to us, but we are the only ones who have found an insurance solution to deal with this problem. We are trying to take the uncertainty out of the situation.

He said that 80 million was the worst case scenario in anticipating the total cost of completing the pensions transfer review.