in Bermuda and the UK. An advantage is that it is likely to speed up a run-off. David Fox reports.

ERROR RG P4 25.2.1998 The run-off of solvent insurer, Scottish & Commonwealth Insurance Co. Ltd., is not the first time in Bermuda a scheme of arrangement normally reserved for insolvent companies was used to wind up the affairs of a solvent company, as was reported in yesterday's edition. Hopewell Insurance Co. Ltd. employed a similar scheme in 1995.

A solvent Bermuda insurer that has been in run-off since 1986 is now the subject of a scheme of arrangement that is usually used for insolvent insurers.

It marks the first time such a scheme has been used for the run-off of a solvent insurer in Bermuda, and is believed to have only been used once before in the UK, which has made it the subject of study by insolvency practitioners in Bermuda and Britain.

This month, creditors of Scottish & Commonwealth Insurance Co. Ltd. met and approved the new scheme of arrangement that is expected to cut, by several years, the amount of time it will take to complete the run-off of the company.

The company is expected to meet all of its liabilities in full and the board of directors believe creditors can avoid waiting the number of years that would normally be required in a run-off, and have it concluded earlier.

The proposed scheme would pay scheme creditors in full in respect to all claims, both actual and contingent, against the company.

A scheme of arrangement is provided for in sections 99 of the Companies Act 1981 in Bermuda and the relevant statute in the UK. In this case, it must be approved by the Supreme Court here, and in the UK, before being applied.

Scheme creditors have until the Bar Date, March 9, 1998, to submit all information in relation to claims. The creditors might expect the first distribution of assets to them under this scheme eleven days later.

Price Waterhouse partners Richard Patching (Bermuda) and Paul Evans (UK) are the scheme administrators.

Scottish & Commonwealth was incorporated here in 1972, a subsidiary of A.R.

Stenhouse & Partners Ltd., which subsequently became Reed Stenhouse & Partners Ltd. Reed Stenhouse was acquired by Alexander & Alexander Services Inc. in 1985, which was subsequently acquired by Aon Corp. in 1997.

The company initially underwrote the deductible on the Stenhouse Group errors and omissions programme until 1977.

It also wrote marine hull and cargo risks of Canadian ship owners; fronted rent-a-captive programmes for Reed Stenhouse's US clients; participated in a property broker line slip led by Swiss Reinsurance Co. and Mercantile & General Reinsurance Co.; and, underwrote a book of non-marine risks on a facultative, excess of loss and proportional basis, the NMUA pool.

The NMUA pool book of business was predominantly property, with some casualty content. Portions of some of the risks were retroceded to captive insurance clients of Reed Stenhouse in Bermuda and to professional reinsurers.

The company's remaining liabilities are considered to be due to cedants of the NMUA Pool. Since the NMUA Pool book of business went in run-off, many of the company's liabilities have been closed by commutation.

The company's balance sheet at March 31, 1997 showed total assets of some $714,000, comprised in the main of cash of $438,000, and balances recoverable from quota share reinsurers.

Total liabilities of $463,000 are substantially comprised of losses and loss expense liabilities of $439,000. Shareholder's equity amounted to $251,000.