(USL) is set to pay out approximately $640,000 in dividends to creditors.

Mr. Gil Tucker of Ernst & Young has written to policyholders and creditors anticipating that in the new year they will be paid 27 cents on the dollar.

That is below the initial August 1992 estimate of between 30 and 40 cents on the dollar.

Mr. Tucker advised, "This payment will result in all the money in United Security being paid out, and no further amounts will be paid.

"This dividend will be paid in early January, and will be mailed to you in the form of a cheque.'' The liquidator has taken directions from the Supreme Court here and the High Court of Trinidad relating to the liquidation resulting in the calculation of claims by Mr. Tucker which have been agreed to by creditors.

The debts of the company have been calculated at more than $2.3 million.

The widely reported circumstances surrounding the collapse of the insurer read almost like a soap opera, dominating the front page of The Royal Gazette for an entire week in early August, 1992.

It involved a trans-Atlantic pasting of the Bermuda Government from a court appointed judicial manager of the company in Trinidad, Canadian, Mr. Brian Fortier. He accused Government of "total amateurism'' for its handling of the collapse of the insurer.

Then it was alleged that USL had transferred half a million dollars worth of assets out of the country to Curacao and the US Virgin Islands in 1989 while it was technically insolvent, an allegation that was later denied by local manager, Mr. James Decouto.

The company provided long-term life, short-term health and accident coverage.

After a five year battle between Trinidad regulators and the company, it was placed under court administration there.

Mr. Fortier accused the Registrar of Companies of neglecting its duty. He said the Government department had allowed USL to continue issuing new policies in Bermuda for five years while it was technically insolvent.

The actuary with 30 years experience said:"It appears that Bermuda knew then (in 1987), that the firm was insolvent and yet did nothing.'' Mr. Fortier, was in fact, so outspoken in criticising the Bermuda Government, that he may have lost his job over it two months later, when he suddenly was dismissed from Acumen Ltd.

But before that, policy holders were furious at the revelation that they had been paying premiums for five years into a technically insolvent company and no one told them.

And the Finance Ministry claimed that it had been misled as to the strength of the company, while the parent company in Trinidad was near collapse under the weight of a $16.6 million debt.

Even in Britain, The Voice, a black British newspaper screamed headlines "Bermuda Slammed for Handling of Insurance Collapse''. It was sub-titled "3,000 policyholders have lost cover and the firm's assets cannot be found.'' USL's Bermuda office was opened in 1964, and closed in August 1992. Its primary business was the sale of life and medical insurance, the premiums for which were collected weekly by company employed agents.

At the time the company closed its doors, there were some 3,900 policies in force. An actuarial report commissioned by the company's head office in Trinidad in 1992 revealed that the assets of the Bermuda branch were insufficient to meet its liabilities.

The Registrar of Companies filed a petition in Bermuda seeking the liquidation of the Bermuda branch. Mr. Tucker was appointed provisional liquidator and a winding up order was subsequently given January 22, last year. The High Court in Trinidad also issued a winding up order on May 31 of this year.

Mr. Tucker said yesterday the business of company, except the Bermuda branch, has been sold or otherwise dealt with by the judicial manager of the company appointed by the High Court of Trinidad.

Although the provisional liquidator tried to have the Bermuda business sold as a going concern, his only option is to liquidate the company's assets and distribute them among the creditors.

But the liquidation met with a number of technical, legal difficulties arising out of the unusual nature of the process, proving to be time consuming and costly, Mr. Tucker said.

To contain costs and distribute the assets as quickly as possible, the liquidator sought, and obtained, directions from the two courts.

The most significant of these directions eliminated the necessity for creditors to file formal proofs of debt. Claims were calculated by reference to the company's records and agreed individually by creditors. The amounts form the basis for the dividend payments.

After the dividend payment in early January, the first meeting of creditors will be held to appoint the permanent liquidator. But since the liquidation will substantially be complete at that time, with assets already distributed to creditors, the permanent liquidator's role will be limited to the conclusion of the liquidation process, without further delay.