Following the collapse of American insurer, Reliance, US authorities have revealed they are to sue the company's auditor Deloitte & Touche.

The move comes after the "big four firm" was accused of inflating the insurer's financial statements by $1bn (£634m).

The accusations include reports that Reliance's executives were draining cash from the troubled insurer.

The lawsuit claims that Reliance executives stripped nearly $200m (£126m) from Reliance.

The Pensylvania insurance department said: "Risk factors and red flags were ignored by Deloitte.

"Instead, Deloitte and Lomelle, in exchange for millions of dollars in fees, facilitated and prolonged Reliance's ability to continue operating."

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