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EQUISURE STOCK HALTED

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NEW YORK-Until last week, reinsurance holding company Equisure Inc. might have provoked envy with reports of triple-digit revenue and earnings gains and a skyrocketing stock price.

Envy is no longer the appropriate reaction: The American Stock Exchange last week suspended trading in Equisure shares and began steps to delist the company amid an investigation of its accounting practices and possible manipulation of its stock by insiders, sources familiar with the situation confirm.

The American Exchange acted after being contacted by Belgian police, who are investigating Equisure's Belgian reinsurance unit, Equihot Herverzekering N.V., along with the fraudulent and now-defunct Dai Ichi Kyoto Reinsurance Co. S.A.

Among those the Belgian police have questioned is a United Kingdom accountant who helped prepare Equisure's financial statements and who performed similar work for Dai Ichi Kyoto.

Belgian authorities have also reportedly issued an arrest warrant for Ronald Charles Bridle, whose business card describes him as an Equihot divisional director and who is also a director of Equihot's former parent company.

A Belgium Judicial Police official refused to confirm the warrant, but Mr. Bridle-who also uses the name Charles Bridel-acknowledged in London court filings last week that he is being sought "for questioning under warrant."

In an interview, Mr. Bridle strenuously denied any connection to Dai Ichi Kyoto and any wrongdoing by himself or Equisure.

"I have personally bought shares" of Equisure, he said. "Unless I've been completely stupid, I don't see what I have to gain by perpetrating a fraud. . .I don't believe the company has done anything wrong."

Equisure also issued a statement from its Antwerp office denying illegal insider trading and charging that the American Exchange "has breached its statutory responsibility to protect investors and the public interest by destroying the market in the company's stock."

The company nevertheless promised to "continue to cooperate" with American Exchange investigators.

However, accountants with Arthur Andersen & Co.-hired by the stock exchange to examine Equisure's books and records-had little success by last week in efforts to find the records at offices in Belgium, the United Kingdom and Monaco, a source familiar with the investigation confirmed.

On Friday, the exchange "initiated formal proceedings to review the continued listing eligibility of Equisure," an exchange spokeswoman said.

Equisure Chairman Peter G. Uttley and CEO Barrie Harding could not be reached.

The company is unrelated to Equisure Financial Network Inc., a Canadian insurance brokerage network that trades on the Toronto exchange.

Although Equisure traces its complex corporate history to a Monaco company formed in the 1940s, its appearance as an international reinsurer is fairly recent.

Mr. Bridle said Equihot S.A.M. of Monaco was a shell company formerly in the hotel equipment business that was acquired and converted to a metals trading company, which its articles of incorporation allowed.

In 1994, Mr. Bridle said, the metals trading operation was largely transfered to Equihot Delfstoffen N.V., a newly formed Belgian corporation. Equihot Delfstoffen, which reported 1995 revenues of $1.4 billion, in turn owned Equihot Verzekering N.V., a Curacao-domiciled insurance unit, and Equihot Herverzekering, a Belgium-based reinsurance unit, both of which were reportedly used only to insure their parent's metals trading.

By 1995, Equihot Herverzekering had begun writing unrelated business and its parent decided to divest ownership of the reinsurance unit.

In a complex deal last year, Equihot Delfstoffen took over a dormant Minneapolis-based former cosmetics company-Aloe Vera Naturel Inc., whose stock traded over the counter-in exchange for all of the stock of Equihot Herverzekering.

Aloe Vera then changed its name to Equisure and became the reinsurer's new parent company, according to Securities and Exchange Commission filings. Within weeks of the deal, Equihot Delfstoffen sold about 73%of Equisure's outstanding stock to an investor group that included Equisure management, retaining a 22% holding in the Minneapolis company, SEC filings say.

In December, Equisure stock moved to the American Exchange and was the exchange's biggest gainer in the second quarter of this year, rising from $6.25 per share last year to a peak of $17.13 a share last month. The stock closed at $15 a share when trading was suspended last Monday.

Accompanying the runup in the stock price has been a series of bullish press releases. Last month, for example, the company reported a 252% increase in second-quarter revenues to $9.2 million from $3.7 million in the year-earlier period.

In its year-end 1996 SEC filings, Equisure reported written premiums of $12.9 million. The company also reported assets totaling $76.7 million, including $36.4 million in marketable securities and $3.3 million in "certificates of gold deposit."

Equisure's outside accountants-Stephen Muggleton of Albion Management Services in Canterbury, U.K., John Geddes of Boeye Geddes Van Gulck & Co. in Brussels and Rick Pavelka of Stirtz Bernards Boyden Surdel & Larter in Minneapolis-declined to provide further information about the company's assets but said they saw no evidence of improper accounting practices.

Equisure has made inroads in both U.S. and London markets: Last year, for example, it executed a deal in which Intercargo Insurance Co. of Schaumburg, Ill., is fronting for it on a book of construction liability business produced by Dallas-based Construction Insurance Brokers Inc., an Intercargo executive confirmed.

Construction Insurance Brokers is separately described in Dallas court filings as a successor to Equipment Insurance Managers Inc., a broker that declared bankruptcy last year in the face of civil fraud charges. Elaine Garner, president of Construction Insurance Brokers and a former EIM officer, could not be reached.

Several of those involved in forming and operating Equisure have figured in previous insurance controversies.

Mr. Muggleton, who prepares the books and records of Equisure and Equihot Delfstoffen for audit, previously provided similar services to Dai Ichi Kyoto, another Belgian reinsurer that collapsed in 1995 and has since become the focus of fraud investigations in Belgium, the United Kingdom and the United States.

In an interview, Mr. Muggleton confirmed that he was questioned earlier this year by Belgian police, who seized his files on Dai Ichi and two related companies.

"I have no problem with that," he said. "As far as I'm concerned, (Dai Ichi) is dead and gone."

Mr. Bridle and David A.V. Carter-who signed the Aloe Vera purchase agreement as an Equihot Delfstoffen director-were previously directors of Hill Leonard Ltd. and W.G. Hill & Son (Insurance) Ltd., respectively, London brokers involved in a fraudulent property insurance placement that bilked Occidental Petroleum Corp. of $22.5 million in premiums in the mid-1980s. Both men were named in a lawsuit filed after the debacle by Occidental broker Bayly, Martin & Fay International Inc.

Mr. Muggleton also headed a U.K. corporation that acted as corporate secretary for W.G. Hill, documents show.

Mr. Bridle and Mr. Carter both deny wrongdoing in the Occidental affair, and Mr. Muggleton said he had nothing to do with Hill's operations.

Meanwhile, Mr. Bridle-while aknowledging that he is an Equihot Delfstoffen director-also denied ever being an officer or director of Equihot Herverzekering, despite his apparent use of a business card in the name of Charles Bridel describing him as the reinsurer's divisional manager.

Asked why he uses two versions of his name, Mr. Bridle said the different spelling is intended to make it easier to pronounce his name correctly with the emphasis on the second syllable. "There is not any intent to disguise my name," he said.

Investigators examining Equisure stock transactions are looking at several trading accounts, including some set up by officials of Equihot group companies, a source familiar with the inquiry said.

Also being examined are buy and sell transactions involving two Isle of Man companies, New Century Services Ltd. and Specialist Millenium Services Ltd., both formed in April.

Mr. Carter said in an interview that he has bought Equisure stock on behalf of both companies using their money. He said he does not know who owns the Isle of Man companies, though, and said he knows nothing of any alleged manipulation of Equisure stock.

For his part, Mr. Bridle charged that the controversy surrounding Equisure has been created by Michael A. Reeve, a former Dai Ichi Kyoto manager who was recently released by Belgian police after being arrested earlier this year. In a libel lawsuit filed in London last week, Mr. Bridle charges that Mr. Reeve has tried to extricate himself from the Belgian investigation by claiming that Mr. Bridle helped direct the Dai Ichi fraud and that the Equihot companies are linked to the scandal.

Michael Verhaeghe, a Brussels lawyer representing Mr. Reeve, denied Mr. Bridle's contentions and said Mr. Reeve will fight the lawsuit.