A former Bermuda Fire & Marine Ltd. life actuary yesterday described in Supreme Court his increasing worries about the solvency of the company leading up to the 1991 hiving off of the domestic business to BF&M Ltd.

During his dealings with Bermuda Fire consultant actuary Ian Michie was even reprimanded by Bermuda Fire chief executive Glenn Titterton and told never to mention the word `bankruptcy' again, according to his witness statement.

Mr. Michie, who was the Canadian-based consultant for Bermuda Fire's life department up to 1991, is the first witness to testify for the company's liquidator. His evidence consists of a previously given witness statement and questions put to him.

Mr. Michie said during the late 1980s the company's management and chairman Charles Collis put pressure on him to squeeze more money out of the life business to help offset losses from the international division.

He sought meanwhile to preserve an extra margin of surplus in Bermuda Fire's life business as a "cushion'' to protect policy holders.

Concerned, Mr. Michie said he wrote letters asking about the problems the rest of the company was facing internationally. He never got answers he said. In a May 6, 1988 letter to Charles Collis he detailed his concerns.

"It would make little sense to me to strip the life fund of all available surplus if the company was not going to survive the year,'' he wrote.

By 1991 Mr. Michie said the pressure had become more apparent.

"The picture was a deteriorating one, a worrying one, in that we seemed to be drawing on more and more of the fat,'' he told the court. "How long could this go on?'' On March 11, 1991 then Bermuda Fire executive Judy Panchaud sent a memorandum to Mr. Titterton discussing how Mr. Michie was evaluating the surplus available at the life business.

"I'm sorry if I'm perceived not to be a `team player' however, I am very concerned about the future of BF&M (Bermuda Fire) and how it will be able to meet its cash commitments in the future,'' Ms Panchaud wrote in a document submitted to court.

Solvency worries dogged actuary "It is because of this concern that I pressed Ian to divulge all additional reserves so that you will be aware of what Lifeco could provide if required to do so.'' At the end of March Mr. Michie visited the Bermuda headquarters and met with Mr. Titterton, David Lines of Cooper & Lines, and company secretary John Patterson.

"At some stage during the course of that meeting and in the context that I now do not remember, I made the surprised comment along the lines that `this company is virtually bankrupt','' he said in his witness statement. "This provoked a very strong reaction from Mr. Titterton to the effect that I should never mention the word bankrupt or bankruptcy ever again.'' Meanwhile in cross examination the defence sought to portray Mr. Michie as an overly protective actuary who attempted to ferret away as much money as possible while being legally obliged to hand over any surplus to Bermuda Fire.

Under questioning he admitted that he was legally obliged to declare any surpluses, and that any he eventually signed over were properly given.

Mr. Michie continues giving evidence today.

BUSINESS BUC