The US seeking to recover $1 billion (£637m) from insurers covering Enron-related losses, told a US court yesterday that those insurers were slow to question the deals.

The insurers, fighting a lawsuit by JP Morgan for the money, argue they do not need not to honour guarantees covering contracts between Enron and offshore entities because they did not know the arrangements were "merely disguised loans from the bank to Enron".

They also claim that insurers can not back loans with "surety bonds" under New York law.

But Enron lender JP Morgan, claims the insurers knew what they were guaranteeing and that their lawyers were aware of the the terms of the bonds.

However, a JP Morgan witness told the court that insurers only started probed Enron's ties to offshore entities when Enron was on the brink of a collapse that cwould trigger payments under the bonds.

The trial is expected to shed light on Enron's intricate finances and its relationship with its bankers.

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