law firm also under attack By Ahmed ElAmin Bermuda Fire & Marine Insurance Co. Ltd. directors, accountants Coopers & Lines, and law firm Conyers Dill & Pearman were involved in misleading local regulators about the company's financial condition when it received approval in 1991 to divide it in two, a court heard yesterday.

Bermuda Fire went into liquidation in 1993 owing about $450 million to international creditors, two years after BF&M Ltd. was created as a separate company for the domestic business.

Gabriel Moss, lawyer for Bermuda Fire liquidators Ernst and Young, yesterday continued hammering home his theme that the five directors on the financing committee, the accountants and lawyers knew or suspected that the company was insolvent without the profits from domestic business.

Profits were being drained from the domestic business to cover the losses, and this fear of insolvency led to the creation of BF&M, leaving Bermuda Fire creditors in the hole, Mr. Moss said.

Mr. Moss is in the third day of this opening presentation before Supreme Court Puisne Judge Vincent Meerabux. He claimed the directors based their assessment of Bermuda Fire's international business on estimates that they knew to be faulty.

At the time when the domestic business was split off into BF&M through a share dividend to shareholders, Cooper & Lines gave the opinion that the remaining international business had a $12 million surplus.

Mr. Moss alleged the accountancy firm had to have known the figures were faulty since actuarial firm Tillinghast had previously consistently underestimated the increasing losses Bermuda Fire was incurring on its international business.

He also alleged the directors had specifically asked Tillinghast not to provide estimates for millions of dollars of losses on future pollution claims that would eventually make Bermuda Fire insolvent. Cooper & Lines could therefore not have properly made an estimate to state that Bermuda Fire was in a surplus position at the time, he said.

Justice Meerabux asked Mr. Moss whether Cooper & Lines were simply only doing what they were asked to do.

Mr. Moss replied that the accountancy firm should have either demanded better figures from Tillinghast, or put a warning on the balance sheet that the estimates could not be relied upon.

He said Conyers Dill & Pearman lawyer John Collis, the son of then Bermuda Fire chairman Charles Collis, went to then Registrar of Companies Malcolm Butterfield with the estimate to get approval for the 1991 split.

"The regulator was misled on the facts,'' Mr. Moss said.

He added that his mention of the regulator was only to outline his case about the intentions of the directors at the time of the 1991 split.

Bermuda Fire's 1991 directors, Coopers & Lines, and Conyers Dill & Pearman have denied the liquidators' claims. The five former directors have said they acted in the best interests of the shareholders and policyholders, who include the creditors.

Mr. Moss continues his opening presentation today.

Legal eagle: Lawyer for the liquidators Gabriel Moss BUSINESS BUC