Liquidators in one of Bermuda's largest insurance and reinsurance insolvencies are writing cheques again, paying out a further $20 million, or an additional five cents on the dollar.

It will bring the total to 68 cents on the dollar, or $283 million, paid out to creditors of Mentor Insurance Company -- more than $52 million (13 cents on the dollar) in three disbursements in the last year alone.

And Ernst & Young principal, Lorraine Alexander, said yesterday, "There's more to come.'' But earlier hopes that the near 12-year-old liquidation could be wound up by the end of 1997 will not be realised.

She said, "We're still having success in getting reinsurance balances in. As long as that is cost-effective, we will continue to pursue those reinsurance balances.

"With the formation of Equitas, there could be some delays in reinsurance payments from the Lloyd's companies, because everything will have to go through Equitas because they are doing the run-off of Lloyd's market debts. It has just been set up, so you can expect that it will take some time to get going.'' The liquidators, Nigel Hamilton of Ernst & Young in London and Charles Kempe, retired partner of Ernst & Young in Bermuda, declared five months ago that the remaining receivables were at the "rocky end of the market'' involving those who were the most reluctant, and in some cases, the most unable to pay.

A tough-talking Mr. Kempe said at the time, "Squeezing what's left to be had out of the tail end of these receivables is something that we have left to do.

We do not intend to set any deadlines by which we will fold our tent, because we don't want any of these debtors to think that we are going to go away at any stage and relax our efforts.

"We intend to collect everything that this company is owed. We have no intentions of letting any debtors off the hook.'' The liquidators' success could never have been forecast in June 1985, when Mentor went into liquidation.

The insurer was set up here in 1968 by Ocean Drilling & Exploration Company (ODECO) of New Orleans, a member of the Murphy Oil Group, to insure the risks of its oil drilling rigs. But when Mentor went bust in 1985, less than ten percent of its business had to do with the oil-drilling industry.

Mentor had begun writing third party business in 1976 and eventually wound up in the wrong part of the market cycle. They unsuccessfully tried to trade themselves out of debt and then unsuccessfully tried to leave Bermuda altogether. Regulators had them declared insolvent to protect creditors.

More than a thousand creditors claimed for $970.3 million in debts. It went from Bermuda's largest captive insurer, to one of the world's largest insurance insolvencies at the time.

Liquidators concluded net liabilities, with rejections, reductions, security, discounting and set-off, at $419.2 million. Initial estimates were that creditors would receive in total some 25 cents on the dollar.

One of Bermuda's most significant insolvencies, the Mentor liquidation has already cost close to $80 million, with huge litigation costs that totaled more than $21 million alone.

The Mentor story reads like a movie script, one of the largest insurance insolvencies in history, which began with bickering creditors and a list of high profile court cases as liquidators spent a fortune on high priced legal talent to recoup hundreds of millions of dollars.

Lawsuits included actions against ODECO, Mentor's managers and their auditors, alleging mismanagement, fraud and negligence.

And there were bizarre claims against the insurer, including one under Mentor's directly written, bar and tavern liability programme from a female patron of a male strip club, "Wet Willy's''.

She alleged injuring herself while attempting to jump astride one of the dancers in the middle of his act. She had photos to support her case.

Another claim came from an angry man, injured in a fight while trying to get his wife to leave the Californian lesbian bar, "The Box Office''.

There was also the need by liquidators to obtain videotape evidence of individuals shown lifting heavy objects after claiming workmen's compensation for permanent disabilities.

Sinister aspects of the case included the mysterious and suspicious Los Angeles murder of a former Mentor president, who liquidators had unsuccessfully sought for questioning.