against its break-away company, BF&M, to recover some $100 million they claim they are owed.

If they go ahead, the case could have serious implications for thousands of Bermuda residents who have insurance policies with the company.

They would face the uncertainty of not knowing if their life, motor, marine or health insurance was in jeopardy.

Observers at home and abroad said there were also wider implications for Bermuda's reputation as an offshore financial centre.

Some businessmen perceive the split-up of Bermuda Fire & Marine two years ago into, effectively, "good'' and "bad'' business, as being a case of asset-stripping.

"It appears the arrangement was an attempt to protect the good assets of the company from the hands of overseas creditors,'' said the boss of a Bermuda-based international insurance company.

"If the Island is viewed as not being able to regulate itself properly then the repercussions in lost international business are incalculable.'' As an application to voluntarily wind up Bermuda Fire & Marine was made yesterday at Bermuda Supreme Court, further details about the row emerged.

Bermuda Fire & Marine was pressured into the move by US-based Transit Casualty, which is thought to be owed about $23 million.

Mr. Burleigh Arnold, who is liquidating Transit Casualty, said: "Transit has been in direct negotiation with agents for Bermuda Fire & Marine for several months seeking to collect reinsurance claims from the company as well as to obtain letters of credit for Transit's case reserves. We weren't successful.

"We had legal counsel issue a statutory demand on the company to pay our claims within 21 days. That demand was not timely met and Transit sought to wind up the company.

"Discussions were held with representatives of Bermuda Fire & Marine and today's action by the company voluntarily wind-up is a direct result of those meetings.'' The action that Bermuda Fire & Marine filed against Transit in September of this year was an application for an injunction to prevent Transit filing to liquidate the company.

Mr. Joel Glass, counsel for the Federation of Jewish Philanthropies, which is thought to be owed more than $10 million, said his client may consider going after BF&M's assets if his firm's claims are not met in full.

"There are definitely unanswered questions about the split-up of Bermuda Fire & Marine,'' said Mr. Glass. "The way the company went about it leaves some big questions open.

"I have yet to formulate an opinion one way or the other yet and will have to consult my client but I think creditors will certainly explore the option of going after the assets of BF&M.'' Other major creditors of Bermuda Fire & Marine are the Connecticut-based ITT Hartford insurance group of companies, which is one of America's largest insurers and is thought to be owed some $40 million; and Chicago-based Crum & Forster, which is believed to be owed about $25 million.

If Bermuda Supreme Court ruled that the assets of BF&M could not be touched, creditors may decide to sue the officers and directors of Bermuda Fire & Marine Insurance at the time of the split, The Gazette was told.

These include former Government Senate leader, the Hon. Charles Collis; Bank of Bermuda president and CEO Mr. Donald Lines; Bermuda Broadcasting chairman Mr. Fernance Perry; retailer Mr. Eldon Trimingham; lawyer Mr. Richard Spurling; Bank of Butterfield chief general manager Mr. Michael Collier; Dr.

John Stubbs, Mr. David A.J.G. White, Mr. G. McDonald Smith, Ms Jeanette Cannonier, Mr. Peter Cooper, Mr. Charles Dyer, Mr. William Frith, Mr. Malcolm Gosling and Mr. Gregory Haycock.

"The timing of what they did and the decision to go ahead without notifying the policyholders leaves big questions about the steps they took,'' said Mr.

Glass.

"We have certainly made the company aware of our concerns previously. We will go forward with an in depth investigation of what was transferred.

"My own opinion, and not necessarily that of the organisation I represent, is that if something has been done incorrectly and we have to litigate it, we will.'' Analysis -- see Page 13