Bermuda-based insurance brokers Stirling Cooke Brown Holdings Ltd. have been found not liable in a lawsuit involving a bank, two insurers and a Burt Reynolds film.

The weekly periodical Business Insurance last week reported that a New York state jury recently ruled against AXA Reassurance S.A. (Axa) on two coverage matters, clearing obstacles for a possible multi-million dollar recovery by Chase Manhattan Bank on loan losses involving the 2000 Burt Reynolds film "The Crew".

The case is one of 11 similar lawsuits pending in the US and many more in the UK over policies written by Axa and other insurers promising to repay the bank loans of movie industry borrowers if films fail to recoup their costs.

Stirling Cooke Brown were involved in putting the deal together, which went sour and has resulted in filmmaker George Litto now seeking $50 million from Axa.

George Litto Pictures said the dispute stems from the lawsuit involving Litto's banker, JP Morgan Chase, insurers Axa Reassurance S.A. and the New Hampshire Insurance Co., a subsidiary of American International Group Inc., and Stirling Cooke Brown Holdings, the broker in the arrangement.

Chase provided Mr. Litto with a revolving line of credit for up to $100 million, which was to be used to produce five films.

The $100 million line of credit was covered by the insurers, who had indemnified the bank for losses that would have occurred if revenue from the films were not enough to pay the bank loan.

The arrangement ran into problems after Litto produced the first film, "The Crew" featuring Burt Reynolds.

Axa and the New Hampshire Insurance Co. argued that they had been misled into accepting the terms of the arrangement by Stirling Cooke Brown and accused Stirling Cooke Brown and JP Morgan Chase of fraud.

However, as Business Insurance reports: "In a declaratory judgment action pitting AXA against Chase, broker Stirling Cooke Brown Holdings Ltd. of Bermuda and others, a New York Supreme Court jury concluded that Chase has a valid cut-through endorsement allowing it to collect directly from AXA, which reinsured the Woodland Hills, California-based fronting company Underwriters Reinsurance Corp. on a policy covering "The Crew."

The jury also rejected AXA's claim that a Stirling Cooke employee knowingly made false representations to AXA officials on the policy for "The Crew" and a second policy guaranteeing repayment of a $7.5 million loan Chase made to the film's producer, Beverly Hills, California based George Litto Productions."

After the dispute, Mr. Litto was denied access to his line of credit and was unable to make the rest of the planned films.

Following the Supreme Court Ruling, Mr. Litto is now seeking arbitration and hopes to use the money to make the big-screen version of "Hawaii Five-O".

His $50 million claim is based on fees the production company would have earned, plus deferred compensation, estimated profits and the minimum the company would have earned as the financier of "Hawaii Five-O".

Stirling Cooke Brown was found not liable in the lawsuit and the company has stopped writing this kind of business.

Stephen Crane, chairman, president and chief executive officer of Stirling Cooke Brown Holdings Ltd. told Business Insurance: "We always felt strongly that AXA's charges were utterly without merit, and the fact that the jury took less than four hours to agree after sitting through six weeks of testimony suggests that they must have shared that view."

It is understood that Axa has also decided to get out of the business of backing Hollywood movies.

Insurance analysts have estimated insurers total exposure to film finance losses at $1.5 billion to $2 billion.