In an article in a top US investment publication, Bermuda-based Stirling Cooke Brown Holdings Ltd. has been branded as a "hot little insurance broker'' with an unsavoury past that "waylaid'' investment company Goldman Sachs and its wealthy clients.

The uncomplementary article, entitled "In Goldman We Trust'' can be found in the February 7 edition of Forbes magazine and on the www.forbes.com website.

The article claims to reveal "How Goldman Sachs and some of its wealthy clients got waylaid by a hot little insurance broker'' with a "checkered past and an uncertain future''.

Goldman Sachs' involvement with Stirling Cooke began in 1996 when the company invested $19 million from wealthy clients to buy 33 percent of Stirling.

Goldman took Stirling public at $22 two years later. The stock rose to $30 and has now plunged to about $3. Forbes attributes this to the Unicover Managers multibillion-dollar workers' compensation scandal. Unicover, an insurance underwriter, got seven insurers to take on workers' compensation exposure for $2.6 billion in premiums. The risk was subsequently passed on others.

"It turned into a game of hot potato,'' the Forbes article stated. "The policies were so badly priced that some insurers ended up with as much as $11 in expected future claims and costs for every dollar they got in premium revenue; the ideal ratio is more like $1.25 for every premium dollar. A passel of resulting lawsuits will take years to unwind. As broker, Stirling Cooke was in the thick of the premium handoffs.'' Forbes noted that Stirling Cooke's role was a "repeat performance of sorts'', pointing out that in the early to mid-1990s Stirling was a broker in a similar workers' compensation ''spiral'' in the London market.

Subsequently seven lawsuits were filed in 1998 alleging Stirling was "negligent (and) misrepresented or failed to disclose the potential effect of the spiral on the reinsurers' exposure to risk''.

And last year reinsurer Odyssey Re, a unit of Fairfax Financial Holdings in Canada, sued Stirling in US District Court in New York, charging fraud in yet another workers' compensation case. Stirling Cooke has denied all charges.

Since the filings auditor KPMG has resigned. Top executives Nicholas Brown and Nicholas Mark Cooke also resigned their operating jobs. Mr. Cooke remains at the company as a non-executive chairman.

"It isn't clear how familiar Goldman was with Stirling's colourful past,'' the article stated. "From 1989 to 1991 the firm's predecessor entity was controlled by Ghaith Pharaon, the Saudi wheeler-dealer who was indicted as a front man in the BCCI scandal and remains a fugitive.'' In 1991 Mr. Cooke and a group of other investors bought the firm. Mr. Cooke was a London-based broker for Carlos Miro, the owner of Louisiana-based Anglo-American Insurance, said Forbes.

"Anglo went bust in 1989, and Miro later pleaded guilty to 16 counts of fraud and got nine years in prison,'' according to Forbes. "He testified that Mark Cooke ''knew about the fraudulent nature of the business... but handled it anyway because it was very profitable for him,'' a congressional report states. Cooke denies this.'' Forbes then questions whether Stirling Cooke should not have revealed the existence of this relationship and the risks in London in its prospectus.

"In the London reinsurance spiral, Stirling placed nearly all of the risk at certain levels of the process,'' Forbes stated. "Also involved: Reginald Billyard, an underwriter who assessed risk for insurers and advised them whether to take part. Today he is president and part owner of J.E.H. Re in Bermuda, the underwriter for John Hancock when the big insurer took on potential exposure of $1 billion of Unicover reinsurance.'' J.E.H. is 39 percent-owned by Stirling. Stirling was the broker on the reinsurance that J.E.H. acquired on behalf of Hancock.

"When Hancock sought to lay off the risk of that reinsurance, Stirling acted as broker again, reaping a second set of fees,'' Forbes alleges.

"Stirling Cooke also is a 50-50 partner in a Cayman Islands-registered reinsurer. The other partner: an investor group led by the Unicover chief.'' On January 18 Stephen Crane, Stirling Cooke's new CEO, announced he had successfully restructured the company and was attempting to bring it to profitability while "embracing the highest standards of professionalism and integrity''.

BUSINESS BUC