Under questioning from the lawyer for Bermuda Fire & Marine Insurance Co. Ltd.

liquidator, a former board member yesterday stuck to his previous testimony in Supreme Court that he understood the separation of the company's profitable domestic assets from the international business in 1991 would be advantageous for policyholders.

Richard Spurling, a partner at Appleby Spurling & Kempe, yesterday continued his testimony as a witness for defendant BF&M Ltd., the company that was created in 1991 to hold Bermuda Fire's profitable domestic business.

Clare Montgomery, lawyer for Bermuda Fire's liquidator Ernst & Young, asked what advantages Mr. Spurling saw in the 1991 reorganisation of the company which segregated domestic assets from international runoff operations.

Mr. Spurling repeated he believed at the time that Bermuda Fire's domestic business would suffer a loss of confidence among the public because of late reporting of financial figures. The company was delayed in getting reports on figures for its international business from London underwriting agent H S Weavers.

The delays endangered the company's compliance with reporting regulations under Bermuda's Insurance Act. Mr. Spurling also said he believed at the time there were good commercial reasons for the reorganisation as each part of the business could become more efficient.

Ms Montgomery questioned why the board depended on financial figures for the 1990 year and whether anyone had tracked whether further losses had occurred by the time the reorganisation happened in 1991.

Under questioning Mr. Spurling said he couldn't recall whether a reference had been made at board meetings that the company had to reorganise as the domestic business would not be able to withstand the increasing losses from the international operations.

He also stated he couldn't recall whether any reference had been made to a potential liquidator.

Ms Montgomery continues questioning Mr. Spurling today.

BUSINESS BUC