Bermuda Fire & Marine Insurance Co. Ltd. relied on independent actuarial firm Tillinghast in deciding what reserves the company should set aside for future claims, the company's former international manager said in court yesterday.

Keith White, who headed Bermuda Fire's international operations from 1985 and 1989, was under cross examination from defence lawyer Elizabeth Gloster, lawyer for defendant BF&M Ltd.

Mr. White was being questioned about how Bermuda Fire set reserves for future claims yesterday. He said the company relied on estimates from Tillinghast.

Management in turn reported to Bermuda Fire's finance committee and then the board about the recommendations for those reserves, he said.

He said Bermuda Fire did not have any input into the methods Tillinghast used in determining estimates for reserves and hence could not influence the results.

Tillinghast was contracted to give an undiscounted estimate of reserves and then used a rate based on the company's return on its investment portfolio to reach a discounted figure on how much the company should set aside to meet future cash flows.

Mr. White had previously testified that he did not think the company was insolvent and believed international losses were under control when he left to join ACE Ltd. in 1989.

Under questioning he said Bermuda Fire was following accepted market practice at the time in not reserving for possible pollution claims. He said the company believed policies excluding pollution coverage protected the company from such losses.

The cross examination continues today. Mr. White is testifying under subpoena.

BUSINESS BUC