a state court ruling denying her petition for receivership of Electric Mutual Liability Insurance Co. (Emlico).

She will consider the efficacy of pursuing the remains of the insolvent insurer which purportedly moved from Massachusetts to Bermuda in 1995.

Massachusetts special assistant attorney general, J. David Leslie, said yesterday, "We are evaluating our options.'' But no matter what happens from here, it no longer has the widespread ramifications it previously had for reinsurers.

For Emlico and its founding parent General Electric Co. (GE), it may no longer matter whether the company is liquidated here or in Massachusetts.

The possibility of a US liquidation may be why, perhaps, they seemed more motivated to effect settlements with reinsurers -- to resolve the real money issues before they could be interfered with by a US receiver. There was always the chance the receivership petition would have been granted. The estate of Emlico consists mainly of what money it can recover from its reinsurers. If reinsurers were right in their assertions, Emlico wanted to be in Bermuda to maximise those recoverables.

They would never have had complete authority to negotiate with reinsurers under a US liquidation, because it would have been state controlled. In Bermuda, liquidations are controlled by the creditors. GE is the only creditor.

Since GE and Emlico have now already negotiated reinsurance settlements with all of the important reinsurers, the issue of reinsurance recoverables is no longer an issue. Neither, it would seem, are fraud allegations levelled against GE and Emlico.

The Supreme Judicial Court's (SJC) denial this week of the commissioner's receivership petition is, in itself, ironic.

The commissioner wanted to come to Bermuda with receivership papers to seek control of Emlico and effect an orderly liquidation. But she only took that position after the SJC ruled Emlico remained a Massachusetts insurer. In the same proceedings, she was rebuffed by the court for adopting an earlier view that Bermuda liquidators should get on with the liquidation, while her office established an ancillary receivership, which would work in support of the joint liquidators.

But SJC justices said that view assumed that Emlico had left the state, and was domiciled in Bermuda. They told her off for letting Emlico think it had escaped state jurisdiction. They said she had no power to authorise Emlico's move to Bermuda; it hadn't actually happened; and in fact, Emlico technically was still present as an insurer in the state.

That forced the commissioner to petition for receivership and control of the company, as she is required to do of all insolvent Massachusetts insurers.

So for the SJC to now deny the petition is in itself a bizarre, judicial twist of events.

But Emlico's chief reinsurers have now all settled out of court, after an intense and ugly legal battle. Emlico and GE settled this month with London Reinsurers, which together accounted for the most significant block of reinsurance.

A similar settlement with the most vocal reinsurer Kemper Re came in June after a bitter struggle. Soon after, Kemper Re was purchased by a GE subsidiary. Negotiations between Emlico and still other reinsurers were concluded previously.

The joint liquidators are David E.W. Lines and Peter C.B. Mitchell of PriceWaterhouseCoopers Bermuda and their London partner Christopher Hughes.

Attempts to contact Mr. Lines were this week unsuccessful.

The Bermuda Supreme Court this January upheld the Bermuda incorporation and liquidation of Emlico in an ex parte order, although the Privy Council two months later said it was "inappropriate'' and "grossly improper'' to do so, in the absence of submissions from the imposing sides.

The Law Lords were surprised by the Bermuda court's ex parte order and said it had no effect, and meant nothing outside of the liquidation.

The reinsurers -- from the US, the UK and Europe -- had previously complained that Emlico and GE had deceived regulators in both the US and Bermuda, and used fraud to get the company to Bermuda.

Reinsurers had long argued that Emlico and GE engineered the move to Bermuda because a privately-controlled Bermuda liquidation would be financially and substantially more favourable to the company, than a Massachusetts state-controlled insolvency.

In dispute were hundreds of millions, and possibly billions, of dollars of pollution liability claims that reinsurers felt Emlico would be passing on to them for the clean up of toxic dump sites.

In order to move to Bermuda, Emlico and GE had to prove to US regulators the company was solvent. Insolvent insurers are not permitted to move, but are usually placed under state receivership.

Yet, four months after moving to Bermuda, Emlico declared itself insolvent in the Bermuda Supreme Court, citing an unexpected deterioration in its ability to cover losses.

The commissioner's office in July 1996 said there was evidence that Emlico's management knew the company was insolvent by late 1994 or early 1995. And it was claimed the company considered liquidation and moving out of Massachusetts as early as 1994.

Yet the firm argued it was solvent as late as August 1995 with a surplus of $254 million. Just two months later, after effecting the move to Bermuda, management said an increase of $679 million in loss reserves was required, which rendered the insurer insolvent.

COURTS CTS