Ruthardt.

The regulator who unsuccessfully sought to wrest control of insolvent insurer Electric Mutual Liability Insurance Co. from its Bermuda liquidators is now staring down state consumer activists who are calling for her head.

The state attorney general's office may rule this week on whether to recommend that the state insurance commissioner recuse herself from auto insurance rate hearings, which are already well under way.

Consumer groups have asked Acting state Gov. Paul Cellucci to fire Ms Ruthardt, claiming she is biased in favour of insurers.

The Massachusetts Attorney General Scott Harshbarger is the Democratic challenger running in the November election against Republican Cellucci. Last week, lawyers in the attorney general's office questioned Automobile Insurance Bureau Director Daniel Johnston about a private, ten-minute meeting he had earlier this year with Ms Ruthardt.

The concern is that they talked about insurance rates and policies. Johnston denies that and said the discussion was about logistical issues.

Even the possibility that Ruthardt might recuse herself, or fight a request to do so, casts an air of uncertainty over the auto insurance industry's bid for a 15.5 percent rate hike.

Ms Ruthardt has been in hot water before. Massachusetts' highest state court denied her petition last month to be appointed US receiver of Emlico, General Electric Co. (GE)'s long-time liability insurer, which is now in liquidation in Bermuda.

In the decision, the Massachusetts Supreme Judicial Court agreed with a prior ruling that Ruthardt had erred in allowing Emlico to move to Bermuda from Massachusetts. Shortly after the controversial 1995 move, Emlico filed for bankruptcy.

The Massachusetts court found that legally and practically, Emlico was nowa Bermuda-based company and therefore the liquidation should occur there. The decision removed a cross-jurisdictional confrontation Between the US state and Bermuda over who would exercise authority over the insolvent company.

Meanwhile, a nasty dispute involving several major reinsurers of Emlico was finally resolved when Emlico and GE settled out of court with each reinsurer.

Late last month, Lloyd's was the last to reach a settlement over the move, in which Emlico had been accused by reinsurers of fraud, and deceiving regulators, so as to leave billions of dollars of GE-related exposures for the reinsurers to pay.

COURTS CTS