The recent resignation by the board of Bermuda insurance and financial services company Mutual Risk Management could be seen as a further blow to the troubled company but it could also be another step in the company's attempt to preserve value and jobs in the company's still successful service units, according to the company's new head David Ezekiel.

In the long run, the future of certain MRM insurance units, including its US subsidiaries, may still not be secure but the continuation of its service units could be preserved under restructuring into MRM Services that could become a privately-held company under the new name of IAS Park.

The company's 8-K filing with the US Securities and Exchange Commission (SEC) last month revealed that its entire board and its long-time chairman and CEO Robert Mulderig were all stepping aside after the company was unable to secure directors' and officers' (D&O) liability insurance.

To replace the board, two men were nominated with David Ezekiel, president and managing director of MRM subsidiary International Advisory Services (IAS) as well as CEO of the newly structured services unit MRM Services, becoming chairman and CEO. Joining Mr. Ezekiel on the board was Paul Scope, who was already chairman and chief executive officer of MRM's insurance brokerage subsidiary, Park Group Limited.

The company's inability to secure D&O coverage was another hit for the company after it posted close to $100 million in losses last year which led to a string of woes including rating downgrades, its US insurance companies being put into state regulated rehabilitation, its share price plummeting (it was trading yesterday at below four cents) and a wave of lawsuits.

Speaking of the situation, Mr. Ezekiel said: "Given the state of the insurance market (with significant price increases across many lines including D&O) and of course, given what had happened to MRM made the quotes (for D&O coverage) many multiples of what we had seen previously - and not something we thought was realistic or affordable. Ultimately, we could not get coverage at an acceptable price."

He added that the company's troubled financial circumstances were also a factor in seeking D&O insurance: "Obviously these events had already occurred but people are afraid of what might still come and that made any extension of the D&O for the old board very difficult."

But he added that as a result of the resignations, the company has now secured D&O coverage: "We have D&O in place for the new board and for all officers of our subsidiaries going forward."

And yesterday Mr. Ezekiel, speaking from his soon to be vacated IAS office - the group's 160 Bermuda staff will all move into the MRM building at 44 Church Street by the end of the week - revealed that although MRM continued to face its share of troubles, the company's restructuring of its service units was nearing completion with a scheme of arrangement being filed in Bermuda court this week: "This development does not change our planned restructuring at all," he said.

The restructuring, which was announced earlier this year, intends to see senior debt holders - with a principle debt of $235 million comprised of some $131 million owing under MRM's credit facility and $104 million owing to debenture holders - exchange debt for 80 percent stock of the new company. MRM is expected to retain 20 percent holding in the new company.

Mr. Ezekiel continued: "The scheme will be filed at the court this week and then there will be time for the voting process. It has to be mailed to all creditors and then the creditors have to be given time to look at the documentation and then vote at the final scheme meeting. It is being done under the Bermuda Scheme of Arrangement and we expect the next meeting, under the current schedule, to take place on January 8."

He added the matter could be wrapped up as early as the first of the year: "Assuming a positive vote - and we think there will be because the scheme is in the interest of all classes of creditors with the whole point of the restructuring being to bring value to creditors going forward - we expect the scheme meeting to be held on January 8. After that we expect the Supreme Court sanction the scheme a week to ten days later."

Speaking further of what the approval of the scheme of arrangement would achieve, Mr. Ezekiel said: "And then what we will have is a new company - IAS Park - going forward. In effect this will be a privately held company and the shareholder group will be what were the creditors and debenture holders of MRM. MRM itself will have a 20 percent interest, but it is important to mention that that will only have value after the creditors are re-paid in full."

Looking at MRM's future, Mr. Ezekiel said it was still clouded by uncertainty: "MRM is now, in essence, effectively in a box. The end result of MRM depends on what happens with the US subsidiaries, and there will be continuing issues with MRM obviously, with lawsuits and negotiations. These will continue to be managed. But our focus is primarily on taking IAS Park forward..."

He continued: "The MRM shares are standing now at 3.6 cents so clearly the world does not put any value in these shares and for the current MRM shareholders to see value would need a positive resolution for the US insurance subsidiary, Legion. And the outcome for Legion, whether or not it will come out of state regulation, is impossible to predict."

But Mr. Ezekiel added: "We clearly believe that Legion is a candidate for rehabilitation and can have some value going forward but there are too many moving parts to say for sure and it is important to stress that."

To underscore the uncertainty, Mr. Ezekiel pointed out: "At the last financial statements of MRM, Legion was written down to zero."

Despite this, Mr. Ezekiel said negotiations to wrest Legion back control from state regulators was still being pursued: "There have been negotiations between Legion and the IPC Companies, which are part of the Mutual Group, to commute contracts.

"There are something in the order of 500 to 600 separate contracts between the two and it was thought to be in the interest of both companies to enter into a commutation agreement with about 120 of those contracts and hand them back to Legion together with the funds to support any remaining liabilities under those contracts."

Mr. Ezekiel said further of the negotiations: "It would put Legion in a positive cash flow position.

"When it went into rehabilitation it had a surplus in excess of $400 million but a severe cash flow problem brought about by its inability to collect from its reinsurers.

" So if the commutation is successfully completed it will do two things: It will make the evaluation of the IPC companies in Bermuda a lot more certain as we would have got a number of liabilities off our books and paid.

"And it will provide Legion with the liquidity to meet claims payments and keep the company going. We think it is important for both companies and we are working with rehabilitators."

But pragmatically Mr. Ezekiel said: "Until the certainty is got rid of we could face (further) legal action as people have money tied up in the IPC companies, and IPC cannot make payments until they have some certainty to their financial position ... of the 500 to 600 cell members in IPC you have got a small number taking action to try and extradite their own funds.

"And these actions have nothing to do with negotiations between IPC and Legion."

Another obstacle for MRM are the half a dozen class action lawsuits launched in recent months by disgruntled shareholders, but Mr. Ezekiel said yesterday the actions should not bear on the new company, IAS Park: "All of the class actions relate to events that have already happened - at this stage the company is where it is.

"Any decisions that were made relating to where it is right now is history.

"So what we have going forward in IAS Park as a completely new company, new team, new board, and 300 employees of which some 160 are in Bermuda, and as of Friday, all under one roof..."