Stirling Cooke

    Two days BEFORE Goldman Sachs-controlled, Bermuda-based insurance broker Stirling Cooke Brown Holdings went public on NASDAQ in 1997 via a $50 million IPO at $22 per share, OffshoreAlert exposed the firm under the headline "Stirling Cooke - what you won't find in its prospectus", with our story detailing a plethora of red flags. Supported by 'buy recommendations' from Wall Street analysts who appeared to be incompetent or corrupt, Stirling Cooke's share price shot up to over $30 before the inevitable plunge to zero, de-listing, and, in 2003, bankruptcy. Apart from huge losses to investors, reinsurance claims estimated at $1 billion were voided as a result of the broker's fraud. Despite controlling Stirling Cooke throughout its fraud spree and refusing four offers from OffshoreAlert to show it evidence of wrongdoing at the beginning of our investigation, Goldman Sachs described its governance as "textbook" to the New York bankruptcy court and declared itself "blameless". Goldman Sachs later paid just $450,000 to settle a lawsuit brought by Stirling Cooke's Bankruptcy Trustee. Remarkably, the Goldman Sachs Managing Director - and Stirling Cooke director - who oversaw the fiasco, Reuben Jeffery III, went on to become Chairman of the U.S. Commodity Futures Trading Commission!
    Timeline
    30

    April

    2002

    Woman brings sexual harassment action against Stirling Cooke

    A 38-year-old woman has filed a lawsuit against Stirling Cooke Group Services Inc. and North American Risk Inc., alleging sexual harassment, assault and violation of her civil rights.
    Cyndie Woodbury, who worked at Stirling Cooke’s office in Bradenton, Florida, filed her action at the United States District Court for the Middle District of Florida on March 28, 2002.

    31

    March

    2002

    Stirling Cooke reports heavy losses, announces possible de-listing

    Stirling Cooke Brown Holdings has reported a net loss of $11.27 million for the quarter ended December 31, 2001, bringing its total losses over the last two fiscal years to $58.34 million.
    The company has also publicly disclosed what InsideBermuda first revealed on January 31, 2002 – that it faces having its shares de-listed from the NASDAQ National Market System.

    31

    March

    2002

    MRM insurance subsidiaries taken over by Pennsylvania regulator

    Mutual Risk Management subsidiaries Legion Insurance Co. and Villanova Insurance Co. have gone into “voluntary rehabilitation” following court action by Pennsylvania Insurance Commissioner Diane Koken.
    The rehabilitation orders, which were granted by the Commonwealth Court of Pennsylvania on March 28, 2002, become effective April 1, 2002.

    28

    February

    2002

    MRM faces July trial on civil RICO allegations

    The collapse of its share price to penny stock status, downgrade of its credit ratings, breach of debt covenants and uncollectible reinsurance are not all Mutual Risk Management has to worry about.
    A jury trial is due to start at Gwinnett Superior Court, Georgia on July 29, 2002 in which MRM is a defendant in a civil lawsuit filed under the Racketeering Influenced and Corrupt Organizations Act.

    31

    January

    2002

    InsideBermuda’s Five-Year Anniversary

    This month’s edition of InsideBermuda marks our fifth anniversary of continuous publication, having launched the newsletter on February 24, 1997.
    In the 60 editions since that date, InsideBermuda has ‘broken’ many significant stories, perhaps most notably about Bermuda Fire & Marine Insurance and Stirling Cooke Brown Holdings.

    31

    January

    2002

    Stirling Cooke and First Ecom.com face NASDAQ de-listing

    Bermuda-based insurance broker Stirling Cooke Brown Holdings and offshore-owned electronic payments processor First Ecom.com, which is funded largely with offshore money, face having their shares de-listed from in the first half of 2002 unless their stock prices improve.
    They have until February 11 to get their stocks above the $1 minimum bid that is required for continued listing on the NASDAQ National Market.

    31

    December

    2001

    Stirling Cooke name change halted due to clash

    Goldman Sachs-controlled Stirling Cooke’s proposed name change to Atlantic Star Insurance Group Ltd. has been halted at the eleventh hour after it was discovered the name clashed with an existing firm.
    Curious as to why the company had not yet effected a name change that was approved at Stirling Cooke’s AGM as long ago as May 23, 2001, InsideBermuda asked Stirling Cooke for an explanation.

    31

    October

    2001

    George Jones steps down as Stirling Cooke’s CFO

    Stirling Cooke Brown Holdings Ltd. has announced that George W. Jones “at his own request and for personal reasons, has relinquished his duties as Chief Financial Officer for an indefinite period of time”.”Mr. Jones will take on new responsibilities relating to resolution of reinsurance disputes and other special projects,” stated an announcement on October 22.

    31

    August

    2001

    Stockholm Re creditors to receive 30 cents on the dollar

    Creditors of Stockholm Re (Bermuda) Ltd., which went into liquidation in January, 1995, are likely to receive just 30 cents on the dollar when all is said and done.
    A spokesman for liquidator Deloitte & Touche in London said that a dividend of 20 cents on the dollar was paid to creditors at the end of May, 2001, with a second dividend due to follow later this year.

    31

    August

    2001

    Bermuda Insurance Market Results Round-Up: Financial problems continue for ESG Re and Stirling Cooke

    The financial woes of John Head’s ESG Re and Stirling Cooke Brown Holdings continued in the second quarter ended June 30, 2001, with both companies reporting further losses.
    Mutual Risk Management, meanwhile, reported a much-needed profit and Annuity & Life Re and Scottish Annuity & Life both made money, as did market giants XL Capital and PartnerRe.

    31

    July

    2001

    Willis Group enters Odyssey Re-Stirling Cooke lawsuit

    Bermuda-registered broker/risk manager Willis Group Holdings has applied to intervene in a civil lawsuit filed by Odyssey Re against Stirling Cooke Brown Holdings and others at the High Court in London.
    Willis, which is effectively seeking to become a defendant, is also believed to have filed a separate lawsuit against Stirling Cooke, apparently in order to cover all liability scenarios.

    31

    May

    2001

    Indictment left Clarendon MGA ‘too depressed’ to work

    A former Managing General Agent for the Clarendon Insurance Group and business associate of Stirling Cooke who claims that a criminal indictment left him too depressed to work is suing an insurer for stopping his disability payments.
    David R. Sanz, 39, claims that he is still incapacitated even though he was acquitted of racketeering, grant theft and fraud by a jury in Florida more than two years ago.

    30

    April

    2001

    Clarendon America/Eton Management involved in premiums dispute lawsuit

    Clarendon America Insurance Company is suing two US Virgin Islands-based brokers for $2.92 million of premiums that were allegedly sent to a firm controlled by Martin Hoffman, instead of to Clarendon.
    The lawsuit was filed against Marshall & Sterling of St. Thomas Inc, d.b.a. Theodore Tunick & Co., and Marshall & Sterling of St. Croix Inc. at the US District Court for the District of Delaware on July 14, 2000 before being transferred to Federal Court in US Virgin Islands on April 10, 2001.

    31

    March

    2001

    Poor results for Clarendon Insurance Group

    Hannover Re has announced what it described as “disappointing” results for fiscal 2000 for the New York-based Clarendon Insurance Group, which it bought in February, 1999. Although Clarendon’s gross premium income increased by 15 per cent to $1.7 billion, the firm’s after-tax profit “fell markedly from $33.8 million to $1 million”, according to a press release dated March 8.

    28

    February

    2001

    MRM share price plummets after $46.1M charge

    Mutual Risk Management’s share price fell by more than 25 per cent in one day after the firm reported a net loss of $37.7 million for the quarter ended December 31, 2000.
    The loss was primarily due to MRM taking an after-tax charge of $46.1 million or $1.11 per share to establish a reserve to settle reinsurance disputes relating to its Program Business.

    31

    August

    2000

    OPL’s massive loss mars generally healthy results for Bermuda insurers

    Bermuda Insurance Market Results Round-Up: The quarter ended June 30, 2000 was a healthy one for most Bermuda reinsurers, with six reporting profits, and two suffering losses, including a massive one for Overseas Partners Ltd. The general view was that the market has turned, rates have hardened and that profits should start rolling in again following a dismal 1999.

    31

    July

    2000

    Ex-NAF&G boss sued by Bank of Bermuda

    John Grant Marshall, a Canadian who was the nominal President of the fraudulent, Bermuda-based reinsurer North American Fidelity & Guarantee, is being sued by the Bank of Bermuda for $265,022.
    The bank filed a lawsuit against the Bermuda resident and his wife, Greta Lois Marshall, at Bermuda Supreme Court on July 13, 2000. No further details are publicly available.

    30

    June

    2000

    Q&A with Stirling Cooke over potential liabilities from Transamerica arbitration rulings

    Inside Bermuda recently carried out a question and answer session with Stirling Cooke Brown Holdings about its potential liability as a result of last year’s Transamerica arbitration rulings, the departure of long-standing associate Reg Billyard, who was portrayed extremely negatively in both arbitration rulings and a new lawsuit filed against it by AXA Re in relation to Hollywood movies.

    30

    June

    2000

    AXA Re sues over Hollywood movie financing fiasco

    Paris-based AXA Re, which faces massive losses from reinsuring Hollywood movies, has filed a lawsuit against Stirling Cooke Brown Holdings, which brokered a small portion of the business.
    Stirling Cooke Brown Holdings Ltd., Stirling Cooke Brown Reinsurance Brokers Ltd. and one of the group’s former brokers, Sawtantar Sharma, are defendants with Chase Manhattan Bank and George Litto Pictures Inc., of Wilshire Boulevard, Beverly Hills, California, in a lawsuit filed on May 2, 2000 at the Supreme Court for the State of New York.

    31

    May

    2000

    Stirling Cooke under investigation by Lloyd’s of London

    Stirling Cooke has disclosed that its UK-based subsidiaries are being investigated by Lloyd’s of London following the apparent insolvency of a Lloyd’s syndicate known as the Alan R. Bird syndicate.
    The Bird syndicate is believed to have become insolvent following an arbitration ruling on December 9, 1999 that rescinded reinsurance contracts with Transamerica Occidental Life Insurance Co., primarily on the grounds that Stirling Cooke, in its capacity as broker, had orchestrated an “abnormally tight” reinsurance spiral.

    30

    April

    2000

    Fidelity mutual fund group takes gamble on Stirling Cooke

    Boston-based Fidelity Management & Research Corp. has taken a gamble on beleaguered Stirling Cooke Brown Holdings and acquired 8.5 per cent of the company’s outstanding common stock. Fidelity’s shareholding, which is disclosed in Stirling Cooke’s recent Proxy Statement filing, makes it the second biggest shareholder in Stirling Cooke after Goldman Sachs.

    29

    February

    2000

    Stirling Cooke lawsuit moved from New York to UK

    Stirling Cooke’s share price hit its highest level in several months following the decision of a New York judge to dismiss Odyssey Re’s racketeering lawsuit against the company. Stirling Cooke’s stock closed at $3.69 on February 29 – up by 47 per cent on the month. The major rise occurred after Judge Naomi Reice’s decision on February 28 to dismiss Odyssey Re’s lawsuit on the grounds that the United Kingdom was a more appropriate forum.

    31

    January

    2000

    Transamerica wins second ‘spiral’ arbitration

    California-based Transamerica Occidental Life Insurance Co. has won a second arbitration over its refusal to pay multi-million dollar reinsurance claims on coverage brokered by Stirling Cooke Brown Holdings.
    The losing party was Alan R. Bird, on his own behalf and representing all members of Lloyd’s Syndicate 103 for the 1993/94 years of account.

    31

    January

    2000

    Alternative Risk Reinsurance Company Ltd.: An Analysis

    Inside Bermuda can today disclose further details about a Cayman Islands-registered company that Stirling Cooke Brown Holdings has been so reluctant to discuss.
    The reason might be because Alternative Risk Reinsurance Company Limited is a joint venture between Stirling Cooke and the individuals behind New Jersey-based Unicover Managers.

    31

    January

    2000

    Alan Bird lawyer writes that Chubb has ‘deepest pocket’

    The Alan Bird Syndicate’s UK attorneys have discussed the possibility of suing the Chubb Insurance Group and Stirling Cooke Brown Holdings in the aftermath of its arbitration loss to Transamerica. Chubb, which previously lost a similar arbitration to Transamerica, is considered to be an attractive target because it has “the deepest pocket”, while Stirling Cooke might escape an action because it was “highly probable that the company will eventually fold”.

    31

    December

    1999

    OffshoreAlert Awards For 1999

    Annual OffshoreAlert Awards for: Worst Regulator, Worst Regulated Jurisdictions, Lie of the Year, Coward of the Year, Crooks of the Year, Jurisdiction in Most Need of a PR Make-Over, Most Small-Minded Decision, Most Arrogant Jurisdiction, Most Stupid Comments, Here Today, Gone Tomorrow Award, and Most Responsible Regulators.