(EMLICO) in Bermuda, against the wishes of angry reinsurers who believe EMLICO's redomestication from Massachusetts should be reversed.

The reinsurers reacted to the news last night by saying yesterday in a prepared statement: "Any deal that leaves EMLICO in Bermuda is outrageous and unacceptable...'' Led by Kemper Re, they have argued in court papers that a knowingly-insolvent EMLICO left the US for Bermuda in mid-1995 to take advantage of more favourable insolvency regulations here.

Reinsurers believe there was a determined effort to stick them with billions of dollars of pollution liability claims from EMLICO's founder and principal insured, General Electric Co. (GE).

They believe the Massachusetts insurance regulators, the Division of Insurance (DOI), should never have approved the company's move to Bermuda.

The joint provisional liquidators, Christopher Hughes, David Lines and Peter Mitchell of Coopers & Lybrand in London and Bermuda, fresh off of settling their dispute with one of the reinsurers, AllState Insurance Co., have communicated confirmation of a published report that they have been involved in negotiations with DOI commissioner, Linda Ruthardt.

The Boston Globe reported yesterday that a deal involving the DOI, the EMLICO liquidators and GE, would provide for the establishment of a US receiver from the DOI that would be involved in the Bermuda liquidation of EMLICO.

The US receiver would aid in the collection and transfer of assets to the joint liquidator.

An EMLICO observer suggested that even with a deal involving GE, it would not effect a GE waiver entered into with the DOI some weeks ago against any claim on the Massachusetts State Guaranty Fund, or any State Guaranty Fund.

But reinsurers said through a spokesman, "Like the original redomestication decision, this would be another back room deal by the Commissioner.

"Despite calls by legislators, consumer advocates and reinsurers -- the ultimate and intended victims of the fraud -- there has never been a public evidentiary hearing into the fraud.

"The Commissioner's private investigation would be dropped before GE and its allies produce the key evidence of the fraud, and it would end in a complete whitewash. The issue of fraud on a public agency is being swept under the rug.'' Reinsurers argued against the deal, they said, because: "GE would be permitted to retain the benefits of its fraud. GE's claims against EMLICO will continue to be handled by GE's handpicked liquidators, with GE acting as puppeteer and enabling it to inflate GE's insurance claims.

"The Commissioner's appointment as an ancillary receiver would be mere window-dressing. This is not a concession by GE because the Bermuda liquidators selected by GE will still be in charge. If the Commissioner truly was concerned about the fraud, she would be demanding EMLICO's repatriation with an independent Massachusetts liquidator in control.

"Such a deal would further erode public confidence in the integrity of Massachusetts' regulatory process.'' The reinsurers claimed that allowing issues involving environmental claims and the reinsurers to be handled by the liquidators, with any decisions being reviewed by the Commissioner and approved by a Massachusetts court, was "in effect a capitulation by the Commissioner to GE and is wholly unacceptable...'' They questioned if the Commissioner could receive objective information from liquidators who "were handpicked by GE''.

They also doubted that the Commissioner or the Massachusetts court would be able to determine the reasonableness of any settlements of GE's claims or decisions by liquidators, or that the commissioner could serve as anything other than a rubber stamp on their decisions.