NRG advisers taken to court

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Legal action which could set into law the responsibilities of an investment bank heated up in the High Court yesterday.

At issue is a case of negligence brought against Swiss Bank Corporation over its advice to a Dutch insurance company, Nederlandse Reassurantie Group (NRG), when it acquired Victory Re, another insurance company. NRG claims to have suffered losses of £255m following the purchase of Victory Re from Legal & General in July 1990 for £122m.

Mr Richard Aikens QC, representing NRG, said the bank was responsible for the pre-acquisition investigation of the target company,which meant it had to advise on the merits of the purchase and the risks involved. "The case is as much about what Swiss Bank did not do as well as what it did do," added Mr Aiken.

NRG is also suing accountants Ernst & Young and actuaries Bacon & Woodrow over the advice they gave at the time of the acquisition. The basis of the NRG claim, which is being vigorously defended, is that they failed to warn over the extent of the shortfall in Victory Re's reserves caused by losses associated with storms in 1987, the Exxon Valdez oil spill and other catastrophes.