Liquidators of Dover Insurance Company Ltd. will this week pay creditors a second dividend of 20 cents on the dollar, Charles Kempe said yesterday.

The first dividend was $4.15 million while the cash position of the second dividend will be slightly higher.

Mr. Kempe, retired senior partner at Ernst & Young (Kempe & Whittle) and now a consultant to the firm has handled the run-off since day one. He anticipated a third and final dividend will give creditors a total of just over 51 cents on the dollar.

A financial summary sent to creditors this week with the dividend, lists receipts of $20.1 million to September 30 against payments of $10.5 million leaving excess of receipts over payments of $9.6 million. With the payment of the second dividend, about $5 million remains.

When put into liquidation, $267,571 was available to creditors.

Total cost of run-off, $6.3 million, so far. The liquidation has generated $3.8 million in legal fees and disbursements, permanent liquidators fees and disbursements of $1.4 million and an additional $390,088 was paid in provisional liquidators fees and disbursements. Consultants fees were about $800,000.

Bermuda-incorporated Dover, which wrote a broad range of marine and property casualty business, went into liquidation in February 1983.

Dover fell on hard times in the mid to late 1970s and early 1980s collapsing because of reinsurance recoverables as well as poor management and poor administration, Mr. Kempe said.

Dover's management was based out of San Francisco.

"Dover dealt with (reinsurance) entities not at the quality end of the market,'' Mr. Kempe said.

"The administrative records of this company were in a shambles (liquidators were) severely hampered by inadequacy of records.'' Liquidators sued Dover's principal, Dr. Irving Pfeffer, an American, and other officers as well as the company's auditors.

That lawsuit had been filed with US Federal Court in California but never went to trial as all defendants settled for a total of $12.8 million.

Dover's creditors include an international group of entities, many seeking payment in the $1 million to $2 million range.

One of Dover's clients was the New York podiatrist association. In Dover's last year of operation the society had a professional liability policy with the insurer. Podiatrists, which faced lawsuits from patients, settled out of pocket then made claims against Dover.

As Bermuda liquidations go, this was not a big one, the largest is Mentor with claims of $1 billion, but Dover was one of the first Bermuda insurance companies that had to be wound up because of insolvency, Mr. Kempe said.

The final dividend to creditors will depend on two court matters not anticipated to significantly affect the total payout but which may delay closing the liquidation.