Bermuda reinsurer ESG Re is suing accountancy firm Deloitte & Touche for $22 million in a case that opens in Dublin's High Court today.

ESG is claiming that it suffered a significant loss of business because three Deloitte companies were negligent and in breach of their duties when working as the reinsurer's auditor.

Deloitte (Bermuda), as well as Deloitte (US) and Deloitte (Ireland) have told the court they intend to defend the action. The case is expected to last up to ten weeks.

Deloitte resigned as ESG's auditor in November 2002. ESG claims that Deloitte's actions led to it being unable to make filings to the US Securities and Exchange Commission and it was subsequently delisted from the Nasdaq.

As a result, ESG is claiming, the reinsurer failed to renew a number of reinsurance contracts and was unable to write new business.

ESG had originally planned to sue for $60 million, but has written to the court to say it would be dropping $38 million from that claim.

Deloitte reportedly stepped down as auditors without warning, informing ESG of its decision in a late evening phone call on November 22, 2002.

In a report in December 2002, the audit firm indicated that it had at least seven disagreements with ESG relating to its financial accounts.

These were reportedly related to provisions for impairment in the value of a company investment, an increase in legal reserves, the proposed write-off of the company's deferred tax asset, the proposed write-off of a receivable, other discrepancies on receivables and payables and finally, disclosure of significant uncertainties relating to the company's financial position.

ESG is a supplier of reinsurance, specialising in life accident and health product development, as well as direct insurance to financial institutions.

Although Bermuda-based, it also has offices in London, Dublin, Lisbon, Hong Kong, Bangkok and Kuala Lumpur.