A London company jointly owned by Bermuda Fire & Marine Co. Ltd. and H S Weavers Underwriters was saved from liquidation in 1988 by the timely help of a top executive, a court heard yesterday.

Keith White, the former head of Bermuda Fire & Marine Insurance Co. Ltd.'s international business, said yesterday the Bermuda London Underwriting Agency (BLUA) was facing cash flow problems because it was not collecting enough money from reinsurers in 1988.

BLUA was a joint venture between Bermuda Fire and Weavers, a Lloyd's of London managing agency which brokered much of the company's international business.

BLUA at the time was having difficulty collecting money from reinsurers that were in financial difficulties.

Company saved from liquidation Mr. White said he couldn't remember much about the manner in which Bermuda Fire dealt with bad debt. "This area of reinsurance is a little blank for me,'' he said.

However, he did remember clearly a conversation he had in 1988 with Peter Wilson, chief executive officer for London United Holdings. The company was the holding company for Weavers and other management agencies including BLUA.

Mr. White said he informed Mr. Wilson that BLUA might have to go into liquidation because the company wasn't getting any cash. Mr. Wilson then became angry and said he was not going to have an agency under London United Holdings going into insolvency. "I believe we agreed to find a way to keep the agency solvent,'' Mr. White said.

He remembered that Mr. Wilson negotiated to divert some commission through an arrangement with a reinsurer into BLUA's coffers to keep the company afloat.

Mr. White, who left Bermuda Fire for ACE Ltd. in 1989, was in his fourth day of testimony over events up to 12 years ago. Mr. White is testifying under subpoena. Tempers became a little frayed yesterday over the questions being asked in Supreme Court by Clare Montgomery, lawyer for the company's liquidator.

Ms Montgomery was focusing her questions on the manner the company accounted for bad debt from reinsurers on its books. However, Mr. White continually repeated that he could not remember seeing many of the documents or the discussions of the meetings explaining he hadn't seen them for many years. In many cases he said he must have seen the documents and under questioning attempted to remember his train of thoughts at the time. After heavy questioning over one particular document, defence lawyers yesterday criticised Ms Montgomery methods, stating that she should simply accept he couldn't remember, and perhaps didn't even see the document at the time. At one stage Mr. White had to be excused from the witness stand while defence lawyers vented their criticisms, stating that the material was far removed from events in 1991 which are in dispute.

Earlier in the questioning Ms Montgomery showed Mr. White a report by actuarial firm Tillinghast which recommended that Bermuda Fire make a provision for bad debt on outstanding insurance claims and on future potential liabilities. She asked why Bermuda Fire didn't follow the advice. Mr. White said his strategy was to set up a contingency fund which built up at the rate of one percent a year. He said due to the uncertainty of potential future liabilities he didn't feel it was necessary to set aside a specific reserve for bad debt in that area.

"The potential for unknown development in the future -- impossible to quantify,'' he said.

Under further questioning Mr. White repeatedly could not recall certain documents. Elizabeth Gloster, lawyer for BF&M Ltd., interjected at one point to stop Ms Montgomery from proceeding with further questions on a certain document after Mr. White said he hadn't seen it.

The questions were often predicated by long breaks as Mr. White read through documents and statements about bad debt provisions. The line of questioning is important in that Bermuda Fire's liquidator alleges that the company's management and board underestimated the reserves and future potential liabilities so as the hide the company's insolvency. Ms Montgomery continues questioning Mr. White today.

Keith White