of the insurance commissioner after a stormy hearing over Electric Mutual Liability Insurance Company's controversial move to Bermuda.

The state legislators failed in hearings of the Joint Committee of Insurance on Wednesday to learn more about how state regulators allowed the now insolvent insurer to move from the US to Bermuda.

In the hearings, committee chairman State Senator Dianne Wilkerson pressured State Division of Insurance Commissioner Linda Ruthardt to convene a public hearing over EMLICO.

At issue for months now has been whether or not EMLICO -- an affiliate of principal creditor General Electric Co. (GE) -- deliberately misled Massachusetts regulators about its solvency.

At issue is whether or not the companies entered into a conspiracy to move EMLICO's "good business'' into subsidiary, Electric Insurance Company (EIC), and then move the insolvent asbestos business from Beverly, Massachusetts to Bermuda, which is seen as being more creditor-friendly.

Sen. Wilkerson criticised the regulators for holding an ongoing EIC inquiry in camera. The commissioner was not prepared to discuss the call for a public hearing.

Sen. Wilkerson said EMLICO's solvency deteriorated so quickly after its move to Bermuda that she believes the company misled the insurance commission last year.

Sen. Wilkerson was quoted by The Wall Street Journal: "Where on earth is the public integrity of the process? It just didn't exist.'' The Boston Globe reported her as saying: "You can't protect the public in secret.'' The secret EIC hearings being held by the commissioner come after angry reinsurers -- who face a potential environmental and pollution bill that could climb to a billion dollars -- have sued EMLICO and GE. EMLICO is also facing a federal criminal investigation.

The US attorney's office in Boston has convened a grand jury and subpoenaed documents relating to the move.

Yet a letter to the legislator from GE argued that the Commissioner was responsible to protect policyholders as opposed to the reinsurers, and the EMLICO move to Bermuda freed the state insurers' insolvency fund from obligations to help pay off claims.

The GE letter also said EMLICO's financial collapse was partly as a result of new actuarial methods which made the company reserve more accurately for environmental exposure.

It noted that three of the reinsurers who have sued EMLICO and GE, have failed to pay asbestos claims totaling more than $75 million dating back to 1991.

EMLICO reinsurer Kemper Re has subpoenaed Bermuda-based Mutual Risk Management (MRM) after word emerged through MRM executives that EMLICO representatives knew before it moved to Bermuda that it was going into liquidation.

Kemper Re lawyers have filed affidavits claiming they learned this through discussions with MRM executives.

The conversations between MRM executives and EMLICO representatives revolved around an EMLICO request for MRM to quote on providing services to the company.

COURTS CTS