Ms. Koken filed the multi-count civil complaint in her capacity as liquidator of Reliance in an effort to recover some $1 billion owed to Reliance policyholders and creditors.

At her urging, the insolvent Reliance had been placed into liquidation a year ago.

The complaint, filed in Commonwealth Court in Philadelphia, claims that in the final years of Reliance's existence, Deloitte and Mr. Lommele, as the company's "allegedly independent auditors and appointed actuary," helped cover up the company's deteriorating economic state and "deflect" regulatory scrutiny.

According to the complaint, financial statements audited by Deloitte, and actuarial opinions issued by Deloitte and Mr. Lommele, misled policyholders, creditors, insurance regulators and the public about Reliance's financial status.

Instead of heeding "red flags," the complaint stated, Deloitte and Mr. Lommele, "in exchange for millions of dollars in fees," facilitated and prolonged Reliance's ability to continue operating, to continue upstreaming cash to its parent companies, and to continue assuming new and renewed policy obligations that it was unlikely to ever fulfill.

Specifically, due to lack of scrutiny from the auditors and actuaries, Reliance's executives and directors were able to strip out about $200 million in cash in the form of dividends, purported tax payments and loans, according to the complaint.

The complaint states that Reliance Insurance's "ultimate" parent company is Reliance Group Holdings Inc. RGH, according to the complaint, owns 100 percent of Reliance Financial Services Corp., which in turn owns 100 percent of Reliance Insurance. Further, the complaint identifies Saul Steinberg, formerly Reliance's chief executive, as RGH's largest individual shareholder.

According to the complaint, from 1998 to the first half of 2000, the Reliance Insurance directors, including Mr. Steinberg, "caused Reliance to pay its parent companies over $500 million in cash." The parent companies in turn paid out most of that amount to its shareholders, including Mr. Steinberg and his family, "while also failing to cause Reliance to collect (or RGH to pay) another $200 million owed to Reliance from RGH," the complaint said.

All this occurred while Reliance's business deteriorated and its loss experience worsened even as the insurer kept increasing premium volume, the complaint alleges.

The combination of all these factors led to Reliance's near insolvency by the end of 1999. But Deloitte and Mr. Lommele allegedly "concealed Reliance's true financial condition by overstating its surplus by nearly one billion dollars" as of year-end 1999, the complaint continues.

Actuarial and auditor malpractice, negligence, and erroneous treatment of risk-based capital are just some of the counts in the complaint.

The complaint suggests that the defendants were motivated "by the desire to increase fee income from an important client;" that they were "blinded to their professional and contractual responsibilities by loyalty to a lucrative account;" or that they may have been "hopelessly conflicted by undertaking the dual roles of auditors and appointed actuaries" for Reliance and its parent corporations.

The Pennsylvania Insurance Department declined to comment, and Deloitte did not return calls.