Troubled financial and insurance services firm Mutual Risk Management has now been hit by resignations from five of its board of directors.

This follows the Bermuda company's announcement last month of fourth quarter net losses nearing $100 million which put the company in violation of some bank and debenture covenants.

Among the resignations were three XL executives: Michael Esposito, chairman XL Capital, Fiona Luck, executive vice-president, group operations, and Bruce Connell, executive vice-president, group underwriting officer.

XL is understood to be an MRM debenture holder having invested $112.5 million in the company last year after MRM was dogged by a string of litigations for outstanding claims.

A spokesman from XL said: “The XL representatives on the MRM board stepped down after it became clear that MRM's changed circumstances would require liquidation (of assets) to satisfy creditors.” The spokesman added that as the board would be called to vote on actions taken by the firm to satisfy creditors - and with XL being a creditor - the XL executives could have faced a conflict of interest.

The announcement earlier this month that a number of the company directors would quit the board, including Welford Tabor and William Galtney, was made in conjunction with news that MRM had sold its fund administration company, Hemisphere Management, to the BISYS Group.

Meanwhile, MRM shares continue to trade well below $1 with its share price closing at 59 cents yesterday. The firm's 52-week low is 43 cents, and its high $12.30. MRM is listed on the New York Stock Exchange.

In light of its poor financial situation, MRM CEO Robert Mulderig said it would not “rule out” becoming part of a “more stable” company. It has also retained the services of Greenhill & Co. a merchant banking firm.