Odyssey Re's lawsuit against Stirling Cooke Brown Holdings Ltd. should be thrown out of court in the US as it belongs in the UK, a court has been told.

Lawyers for Bermuda-based brokerage Stirling Cooke argued in a memorandum filed this week in the US District Court of New York that the fight belongs in the UK because contracts involved in the dispute were generated there.

It described the allegations that it was at the heart of a scheme to trick reinsurers into accepting underpriced workers' compensation business in the US as "wholly without merit''.

Odyssey Re (London) Ltd.'s lawsuit names many defendants. Among them is Stirling Cooke's North American operations -- one of very few US defendants.

Most of those named as defendants operate in the UK, as do Stirling Cooke's reinsurance and insurance brokerages.

The lawsuit says underwriting agent Euro International Underwriters Ltd.

accepted workers' comp business brokered by Stirling Cooke Brown North American Reinsurance Intermediaries Inc. despite the fact the companies were only authorised to write personal-accident business.

That would have been limited to risks like accidents, kidnap and ransom insurance, travel accounts and sport-injury risks.

But Stirling Cooke has attacked the lawsuit for never pinpointing the fraud allegedly committed, and only "attributing the alleged misconduct generally and collectively to 14 defendants''.

Stirling Cooke has also hit back by maintaining that in the London market personal-accident business includes the health and accident portion of workers' compensation risks.

Their memo states: "No fraud occurred in the US. Rather, the conduct at issue occurred in the UK and relates to contracts entered there.'' It went on to argue that all of Odyssey's losses would occur in the UK, even though they stem from business generated in the US. Odyssey has justified filing the suit in New York by arguing the US has a stake in preventing fraud and Odyssey's parent company Odyssey Re Group is based there.

Stirling Cooke announced earlier this month that to stop its sliding stock price it had hired consultants Donaldson, Lufkin & Jenrette to examine "strategic alternatives'' like selling up or working with a partner.

Stock analysts blame the falling stock value on the company's damaged credibility as a result of the law suit.

Stirling Cooke posted a ten percent drop in its 1998 first-quarter net income of $3.6 million from $4 million for the same period last year.

It estimated its full year earnings would be down 25 percent on 1998 based on projected lawsuit costs, Donaldson, Lufkin & Jenrette's fees and the competitive market driving down insurance rates.

COURTS CTS