footing of United Security Life Insurance Company, it has been claimed.

Government was led to believe that United Security had been getting stronger financially since it was deemed insolvent in 1987, said Minister of Finance the Hon.

David Saul.

In fact, the parent company's financial position was deteriorating to such an extent that by December of last year it was $16.6 million in debt.

Dr. Saul said yesterday: "I would like to know why information we received indicated the situation in Trinidad was improving when it was getting worse.'' Some documents which the Registrar of Companies had requested from United Security never arrived, he added.

Dr. Saul confirmed that Bermuda's insurance regulators were aware that the Trinidad-based parent company was insolvent in 1987.

But instead of seeking to wind up the company then, Government thought it best to take other steps, he said.

First, it tried to encourage the local branch, which has 2,000 policyholders, to set up as a Bermuda company.

When that failed, it tried to arrange a takeover of the local branch by Bermuda's Non Resident Insurance Undertakings and then by local insurance companies.

Yesterday, Dr. Saul said he was disappointed that none of his Ministry's actions succeeded.

"I'm definitely saddened that the local branch could not form itself into a local entity or arrange some sort of amalgamation with an NRIU or a local company,'' he said.

The Royal Gazette has been told that several firms were approached about a possible takeover, including British American Insurance, BF&M and Argus Insurance.

Dr. Saul defended his Ministry from claims that is should have acted much sooner, which would have saved local policyholders hundreds of thousands of dollars in premiums.

"Even up until a year ago serious discussions were going on with NRIUs about a possible takeover,'' he said. "We had very good reason to believe that the company would be taken over.'' But Government's confidence proved to be unfounded, just as it had over the state of the company's health.

Dr. Saul added: "We have been monitoring the situation since 1987 and every indication we have had was that things were going to get better down there.

"We were getting a lot of partial information about the company. We were asking for certain information and not getting it.

"We were getting annual results which were saying things were going well. The information we got didn't cause us to believe that we should send someone down there immediately.'' Alarm bells started ringing in earnest last December when the Trinidad Insurance Supervisor warned Bermuda's regulators of the extent of the parent company's debts.

Bermuda's Registrar of Companies finally sent someone down to Trinidad in April to assess the situation first hand and came back recommending immediate action.

Earlier this week, Bermuda's Supreme Court appointed a provisional liquidator to protect the firm's Bermuda assets.

"The evidence we have is that the parent company is about to be wound up,'' he said, even though this is not the recommendation of the firm's court-appointed administrator in Trinidad, who favours keeping the company going in some form.

"If the parent was wound up, the Bermudian policyholder would basically end up with getting nothing,'' said Dr. Saul.

"Our action is solely right now to protect the Bermuda assets and guarantee that local policyholders at least get some of their money back.'' But they are only likely to get between 30 and 40 cents on the dollar if the local branch is liquidated.

Many local policyholders have attacked Bermuda's insurance regulators for allowing United Security to keep taking their premiums for five years even though the authorities knew the company was insolvent.