Overseas Partners Limited (OPL), the Bermuda-based reinsurer currently in liquidation, has reached tentative settlements in two class-action lawsuits at a cost of $10 million.

The company was sued in 1999 and 2000 for allegedly selling sham insurance for shipments sent via United Parcel Service.

Plaintiffs who bought shipping insurance from UPS between 1984 and 1999 alleged that the shipper was illegally self-insured and sent the premiums it collected to OPL, which was owned by UPS shareholders.

One of the suits represented customers in Texas, Ohio, Indiana and Kentucky and sought damages of $42 billion.

Plaintiffs filed the suit after UPS lost a US tax court ruling that determined that the insurance scheme amounted to tax evasion.

The ruling was reversed, but by that time the programme had already been terminated and OPL entered liquidation the next year.

The lawsuits? other defendants included UPS and companies who allegedly designed the shippers? risk programme ? American International Group, Prometheus Funding Corp, Aon Group (Bermuda) and National Union Fire Insurance Company.

In a letter to shareholders, OPL said the settlements were subject to the execution of a final agreement and court approval.

In addition to settling the suits, OPL said it reduced reinsurance liabilities by $350 million in the third quarter, resolved tax issues with the US Internal Revenue Service, paid off long-term debt and sold off equity and real estate assets.

In the letter to shareholders, president and chief executive Mark Bridges and chairman Robert Clanin said that the company was now better able to focus on commuting its reinsurance liabilities.

But they said the company could experience difficulties with creditors who may not be willing to agree to commutation terms and it may need to explore other options, such as selling off reinsurance subsidiaries.

Yesterday, the company paid shareholders a liquidating distribution of $2.50 a share.