wrong with the split-up two years ago of Bermuda Fire & Marine Insurance, which this week applied for a voluntary winding-up order.

His statement came as the directors of BF&M Ltd. moved to reassure policyholders that their insurance was safe, saying there was no basis for any claim against BF&M by creditors of Bermuda Fire & Marine Ltd.

The Royal Gazette reported yesterday that some overseas creditors of Bermuda Fire & Marine Ltd. -- which was split from BF&M in 1991 -- may sue the company to recover money they claim Bermuda Fire & Marine owes them.

Dr. Saul, who had a series of emergency meetings to discuss the matter yesterday, said the directors and officers of the company were right to protect the firm's shareholders and policyholders, which may have come at the expense of its creditors.

"As far as the Ministry of Finance can see, from looking back at the records, we would say that what they did was correct,'' said Dr. Saul. "It would appear sensible to split their international and local business.'' US creditors, who claim they are owed $100 million by Bermuda Fire & Marine, have accused the firm of stripping its assets to prevent it from meeting its liabilities to them.

But Dr. Saul said: "What Bermuda Fire & Marine did was to make sure they got their liabilities as low as they possibly could.

"They took measures to protect themselves and that is something not unheard of in the day-to-day activities in business.'' He added: "Nothing was done that's illegal or improper. Looking back now on what was done, I don't think I should have stepped in when it happened.'' Dr. Saul said he did not agree with claims the row would damage Bermuda's reputation overseas. "I think the international business community will probably yawn,'' he said. "They will look at it as a little Bermuda company that dabbled in the big wide world and got burnt.'' In a statement yesterday, the directors of BF&M, which issues life and general policies to many Bermudians, said: "The shareholders of BF&M Ltd. should be aware that there is no basis for any claim against their company by creditors of Bermuda Fire and there is, therefore, no reason for concern by investors.'' Referring to the article in yesterday's Royal Gazette , BF&M said: "In that article there were several references to a sales agreement between Bermuda Fire & Marine Insurance Company Ltd. and BF&M Ltd. which took place two years ago.

"The directors of BF&M Ltd. wish to make it absolutely clear that the purchase of the domestic business by BF&M Ltd. from Bermuda Fire was a commercial transaction for which Bermuda Fire received a fair market value.'' The statement referred to an explanation in BF&M's annual report for fiscal 1991, which stated: "On 5th September, 1991, BF&M acquired effective 1st July, 1991, all of the issued capital, business and staff of these companies (Bermuda Fire's domestic business).

"The total purchase price of $56.68 million, representing the value of the companies at 1st January, 1991, was satisfied by $10 million cash, a $3.5 million loan note, 1,000 nine percent convertible cumulative redeemable preference shares of BF&M and 2.88 million common shares of BF&M. The said purchase consideration was adjusted to take into account the aggregate earnings from 1st January, 1991, to 30 June, 1991, of $3.465 million.

"The purchase agreement also required BF&M to pay interest at seven percent per annum on the full purchase price for the period from 1st July, 1991, to the actual date of transfer on 5th September, 1991.'' In an attempt to reassure local policyholders, BF&M said: "Policyholders should appreciate that BF&M Ltd. is the owner of BF&M General and BF&M Life.

It is these two subsidiary companies which issue policies of insurance to the general public in Bermuda. Each company is a separate and distinct legal entity.'' BF&M's directors said The Royal Gazette had "grossly misrepresented the facts''.

On a day of press releases, there was a separate announcement from the provisional liquidators, Mr. Gareth Hughes and Mr. Tony Joaquin, who were appointed by Bermuda Supreme Court yesterday.

It stated: "The provisional liquidators are taking steps to investigate the financial position of the company, to review affairs generally and, for these purposes, anticipate the full co-operation of the directors, officers and advisors of the company with whom they are already in contact.

"It is obviously premature for the joint provisional liquidators to form their own view regarding the solvency of the company.

"Nevertheless, the joint provisional liquidators have been provided with copies of draft financial statements for the year ended December 31, 1992.

These show that the company has a positive net worth and may ultimately be able to meet obligations to creditors.

"However, the company was experiencing cash-flow problems due to uncertainties regarding the ability or willingness of reinsurers to meet their obligations.

"In addition, there were difficulties in relation to determining accurately loss reserve requirements.

"Against this background, the directors filed a petition for the winding up of the company and obtained the appointment of the joint provisional liquidators to protect the interests of the creditors and shareholders.

"There have been statements in the Press and elsewhere regarding the propriety of transactions which took place in 1991 involving the domestic insurance business.

"The joint provisional liquidators made no comment regarding the propriety of these transactions.

"However, the joint provisional liquidators do wish to affirm that it would not be in the interests of the company or its creditors to disrupt the domestic insurance business of BF&M Ltd., a separate legal entity, and its subsidiaries.

"We make this statement in the hope of providing some degree of assurance to policyholders of the companies within the BF&M Group.'' It was learned yesterday that Bermuda Fire & Marine is a co-defendant in three legal actions in the High Court of Justice (Queen's Bench Division) Commercial Court in London in which three of their reinsurers are trying to get out of agreements on the grounds that the defendants "misrepresented'' the business to them.