Conyers Dill and Pearman, lawyers for Arthur Anderson's Bermuda captive, Professional Services Insurance Company Ltd., would not comment on the status of the insurer yesterday as speculation that failure to pay a settlement in an Arizona fraud case may spell the end for Andersen.

Media in the US and UK have reported that Professional Services Insurance Company Ltd. has been forced into insolvency following the failure to pay the $217 million settlement after Andersen failed to send $100 million to the insurance company to help pay the claim.

However, no filings in the Bermuda Supreme Court have been made concerning the insurance company.

The insurer is registered at Clarendon House, Church Street, Hamilton, which is the home of Conyers Dill and Pearman, but attorneys there would not make a comment on the status of the company when contacted by The Royal Gazette yesterday.

Professional Services Insurance Company was registered as an exempted company in Bermuda under the Companies Act on May 16,1991.

Conyers Dill and Pearman acted as attorney for the company which was a class 2 insurer with minimum capital requirements of $120,000 and authorised capital of $50 million.

A Class 2 insurer is defined as: "Multi-owner captives which are defined as insurance companies owned by two or more unrelated persons provided that the captive underwrites only the risks of the owners and affiliates of the owners and/or risks related to or arising out of the business or operations of their owners or affiliates.

"A Class 2 licence will also apply to simple parent and multi-owner captives writing no more than 20 percent of net premiums from risks which are not related to or arising out of the business or opportunities of their owners or affiliates.

"Class 2 insurers are required to maintain minimum capital and surplus of $250,000."

On December 31, 1995, the insurer reregistered pursuant to section four of the Insurance Act 1978, as amended by the Insurance Amendment Act 1995, effective January 1 1996.

Section four of the Insurance Act deals with special provisions for insurers carrying on long term business.

The company was also granted a license to carry on business as a local company in Bermuda on September 24 1998, which remains valid until December 31, 2003.

The licence was granted to provide professional indemnity coverage for local partnerships Scott Hunter & Co. and Arthur Andersen & Co.

Partner at Arthur Andersen (Bermuda) Scott Hunter has said he will not comment on the matter.

On December 14, 2000, the company submitted a Memorandum of Increase of Share Capital of $250 million which was authorised by a resolution passed at a special general meeting of the company on November 10, 2000.

This meant the total authorised share capital was $300 million.

The $217 million settlement involved fraud at the Baptist Foundation of Arizona, which Andersen audited since 1984, and which filed for Chapter 11 bankruptcy protection in 1999.

The Baptist Foundation was set up in 1948 with a stated mission to raise money for religious causes by selling notes to churches and private investors, mainly Baptists, but bad real estate deals led to big losses for the fund, with 11,000 investors losing $570 million in what Arizona officials said became nothing more than a "Ponzi scheme".

The collapse of the fund was the largest failure of a non-profit entity in US history.

Last Friday Andersen notified Arizona Attorney General Janet Napolitano that the captive declined to pay the settlement due to its financial position.