The long-awaited approval of a creditors scheme of arrangement for Mutual Risk Management that sets the course for its service entities to continue carrying on business under the name of IAS Park was finally put into effect last week. The scheme, which had been on the table for over a year now, effectively restructures MRM's senior debt and enables the company's captive management and insurance brokerage operations to continue as an independent company.

In a Press release issued this week-end, IAS Park CEO David Ezekiel said: "We've been working towards this outcome for the last 15 months and that we've grown our business during this period is due entirely to the loyalty of our current client base and our staff."

Mr. Ezekiel continued: "Whilst our business held up relatively well during this difficult period, it is a huge relief to get the MRM `issues' behind us and the prospect of taking IAS Park forward is a challenge we relish."

He added that the completion of the restructuring of MRM would allow the successful service companies within the group to move forward "independent of the troubled MRM underwriting companies".

In a letter to employees, Mr. Ezekiel said the completion of the MRM restructuring was a "great relief" and heralded what he called "the birth of the new company IAS Park Ltd.".

IAS Park will be the holding company for International Advisory Services Ltd., The Park Group Ltd., Shoreline Mutual Management, and the other service companies which were previously part of the MRM group. As a result of the restructuring, IAS Park will no longer have any corporate or ownership connection with Legion Insurance, Villanova Insurance Company, or Legion Indemnity, the US-based insurance units of MRM which were the company said were the main contributors to MRM's problems.

The Bermuda insurance companies and rent-a-captive units of MRM will remain under the MRM ownership and not be part of IAS Park, though IAS said it would be responsible for servicing the run-off for these companies under a management agreement.

Although happy news for IAS Park, it is effectively the final death knell for Mutual Risk Management, which was up until recent years one of the leading lights of Bermuda's insurance sector.

MRM all but came to a standstill after it reported losses of close to $110 million for 2001. MRM's staggering loss sent the company into a near death spiral.

After the company announced those results, its stock fell to trading below a dollar and its shares were delisted after ten years on the New York Stock Exchange.

The loss also put the company in default of certain credit agreements and over the next few months a string of executives and directors resigned, state insurance regulators took over its US insurance units, and it was faced with numerous legal actions launched by unhappy clients as well as multiple class action lawsuits by disgruntled investors.

Ultimately, real questions arose as to the company's ability to continue. In a November, 2002 interview with The Royal Gazette Mr. Ezekiel - who replaced CEO Robert Mulderig when he retired in November along with the company's board of directors after difficulty in securing D&O liability coverage at a reasonable price - said MRM was now "effectively in a box".

Mr. Ezekiel said, however, that the company's future could be brighter if there was a "positive" outcome to its negotiations with state regulators in control of its US companies, Legion and Villanova.

But earlier this month a Pennsylvania Court finally ordered the liquidation of Legion and Villanova - after more than a year under the control of the state's department of insurance. The net effect is that MRM's senior debt holders will recoup part of their investment but shareholders of the company's common stock may never see the money they invested.

Speaking with The Royal Gazette in May, 2002 then MRM CEO Robert Mulderig said of the restructuring and how it may bear on shareholders: "What the (restructuring) does is eliminate all the debt of the parent company and takes away the debenture defaults. And the realisation of value for the MRM (common) shareholders will largely come about by virtue of whether we see a recovery out of the rehabilitation and the substantial realisation of value that is there in the Legion Companies." In a Press release issued on Friday, the company said: "As a result of the restructuring, the MRM's remaining principal assets are 20 percent of the common shares of IAS Park and all of the common stock of its US insurance companies. These common shares in IAS Park are subordinate to the debt and preferred stock of IAS Park and are unlikely to provide value to the common shareholders of MRM. The likelihood of the realisation of value from MRM's investment in its US insurance companies is also very remote, as such companies will almost certainly be liquidated in the near future.

"As has been previously announced, the Scheme restructures MRM's senior debt.

"The principal amount of the debt is $198 million, comprised of approximately $110 million owing under the company's credit facility and $88 million owing to holders of the company's 9 percent debentures." Under the scheme, senior debt holders have exchanged their existing debt for preferred stock and warrants to purchase 15 percent of the common stock of MRM on a fully diluted basis as well as debt, preferred stock and 80 percent of the common stock of IAS Park. The company will continue to be headquartered in Bermuda with 128 employees in the local office and 275 staff worldwide.