Ltd. with a multi-million law suit charging that the company engaged in fraud and racketeering.

In a suit filed last week in the US District court for the Southern District of New York, Odyssey Re claimed Stirling Cooke was part of a fraudulent scheme to "improperly extract millions of dollars in commissions and fees'' on business it brokered.

Stirling Cooke chief financial officer George Jones said the company's lawyers were examining the charges and the company will respond next week.

"We believe that we have not done anything wrong,'' Mr. Jones said.

He said the suit is lodged against some of the company's subsidiaries and other unrelated companies for which Odyssey provided reinsurance for millions of dollars worth of workers' compensation and personal accident coverage.

According to Reuters news agency, the suit names various subsidiaries of Stirling Cooke, Nicholas Brown, a founder and significant shareholder in the company, Bermuda-based Centaur Underwriting Management Ltd, Raydon Underwriting Management Co. Ltd., JEH Re Underwriting Management (Bermuda) Ltd., Reginald Billyard, Euro Interntional Underwriters Ltd., John Hubert Whitcomebe and Christopher R. Henton, and Connecticut-based WEB Management.

Centaur is managing general underwriter on behalf of Sun Life of Canada and Phoenix Home Life.

Odyssey's suit states that through Stirling it provided reinsurance for a number of companies, then sought reinsurance to protect itself from losses on the policies. The companies are Phoenix Home Life Insurance Co. and Lincoln National Insurance Co.

Odyssey claims Stirling, acting as a broker for Odyssey, disguised the policies and sold them back to Odyssey. Other defendants include various subsidiaries of Stirling Cooke and Nicholas Brown, a founder and significant shareholder of the company.

Odyssey claims Stirling Cooke and its "co-conspirators'' induced the company "to act as a reinsurer for what ultimately was grossly underpriced business guaranteed by its structure and terms to generate overwhelming losses''.

The suit is tied into a workers' compensation reinsurance pool hit by large losses. Insurance industry analysts expect companies involved with the pool to lose about $1 billion to $2.5 billion. The analysts say the losses will stem from claims filed against the policies, which they claim were underpriced.

The pool is made up of a syndicate of five insurance companies, operated by Unicover Managers, a unit of Delphi Financial Group Inc. Odyssey provided reinsurance for two of the companies involved in the syndicate, Phoenix Home Life and Lincoln National.

Odyssey Re has asked for a jury trial, treble damages and a judgment directing cancellation of the reinsurance and other contracts that have been placed with it.

"The complex corporate structure of the Stirling Cooke entities -- through among other things, interlocking directorships and common officers -- enabled defendants to create, sustain and conceal the existence and operation of this unlawful enterprise from Odyssey Re London,'' the company stated.

Odyssey Re London is a unit of Fairfax Financial Holdings, which acquired the company as part of the purchase of Sphere Drake Holdings Ltd. The Bermuda operation became Odyssey Re Bermuda.

Over the past year Stirling Cooke Brown's share price has declined dramatically. The company's share price has fallen 46 percent since the start of 1998.

COURTS CTS