Bermudian joint liquidators for Electric Mutual Liability Insurance Co. Ltd.

and the Massachusetts Division of Insurance (DOI) by calling it "another back room deal''.

Although the Bermuda Class 3 insurer, its principal policyholder General Electric Co. (GE) and subsidiary Electric Insurance Co. (EIC) were a party to DOI discussions that led to the agreement announced on Thursday night, reinsurers facing hundreds of millions of dollars in EMLICO claims said they were not.

DOI Commissioner Linda Ruthardt on Friday petitioned the Commonwealth of Massachusetts Supreme Judicial Court for Suffolk County for her appointment as a US receiver for EMLICO and for court sanction of a receiver's agreement between her and the liquidators.

A hearing is set down for April 8 and lawyers for EMLICO's reinsurers have promised to be there. They want a receiver appointed, independent of GE, who can objectively assess their claims and where necessary litigate with GE.

Under the agreement, costs of the receiver, her special counsel and costs for a special master (or special referee) would be billed to the EMLICO estate and paid by the liquidators out of the EMLICO account.

But reinsurers are not pleased. Joseph McCullough, Chicago partner of Lovell White Durrant, Kemper Re's lawyers, complained that reinsurers were denied input into the process. And he criticised the special master's role in the agreement.

"It's a back room deal,'' he said, "much like the original redomestication approval.

"Ms Ruthardt said that the handling of the environmental claims will be repatriated to Massachusetts. The agreement still has GE and EMLICO doing the settlements, packaging the documents and sending them to Massachusetts.

"The commissioner and the special master will have no ability to get further information other than what is being volunteered to them by GE and EMLICO. And the special master can't substitute his judgment for that of EMLICO and GE.

"It is an extremely deferential standard of review and will amount to nothing more than a rubber stamp of the claims. It also appears that very little, if any, role will be given to reinsurers in the special master's hearings.

"And the special master is someone who GE will be involved in appointing.

That is unbelievable.'' EMLICO's Bermudian liquidators said the settlement agreement confirms EMLICO's continuing status as a Bermuda insurer. Permission for the arrangement was also sought through the Bermuda Supreme Court.

But Mr. McCullough said the liquidators had been appointed, and were now being controlled by GE. He expressed surprise that GE had been involved in the discussions that led to the settlement agreement, and suggested that GE had in fact controlled the negotiations.

He said that it was further evidence that the whole matter was designed from the very beginning to benefit GE at the expense of the reinsurers. He predicted that there would be "massive opposition (from reinsurers) to the approval of this agreement''.

Lloyd's, General Re and Kemper Re have been in the forefront, but they claim there are hundreds of reinsurers who share their concerns over the entire EMLICO issue.

The Coopers & Lybrand liquidators, David Lines and Peter Mitchell of Bermuda and Gareth Hughes of London said in a prepared statement: "Under the agreement, a special master jointly appointed by the Bermuda Supreme Court and the Massachusetts Supreme Court will conduct a review if any compromise of General Electric's environmental claims is proposed.

"The agreement also allows for the appointment of Massachusetts Insurance Commissioner as US Receiver for EMLICO, who will coordinate her efforts with the joint liquidators. This agreement paves the way for an efficient resolution to all claims brought in EMLICO's winding-up proceedings.'' The settlement becomes effective upon the court's entry of the proposed EMLICO liquidation order and approval of the receiver's agreement. At that point, the commissioner is to release claims against GE, EMLICO and EIC due to events related to the 1995 redomestication of EMLICO to Bermuda.

Ms Ruthardt said Thursday: "The repatriation of the important coverage and reinsurance issues to Massachusetts reflects a significant public policy benefit. I am pleased with the overall result.'' But Mr. McCullough said upon review of the settlement agreement: "It is a total abdication by the commissioner of her responsibilities and a capitulation to GE. It's clear that GE has made no real concessions, while the commissioner has given up almost everything.

"She abandons the investigation into the fraud and then agrees never to re-open the redomestication hearing, even though last July, she issued an order saying that there was evidence that misrepresentations had been made to her office.

"She also gave assurances in that order, and later to the Insurance Committee of the State of Massachusetts which oversees her division, that she would get to the bottom of it. Investigate the fraud, take discovery, get the information and determine whether in fact a fraud had occurred. She said she would make public a full report to the committee.

"Now, she abandons the investigation before it is completed and agrees never to reopen it. She releases the people who are alleged to be involved in the fraud from any claims by her division.'' GE and EMLICO have consistently denied the fraud allegations. But there were indications that while Ms Ruthardt will not pursue the fraud investigation, law enforcement agents are still able to do so.

Still Mr. McCullough continued, "She also agrees to withdraw her brief for the Supreme Court of Massachusetts, with regards to the Clifford Chance, Chadbourne & Park documents.'' London law firm Clifford Chance was said to have prepared a memorandum for EMLICO before their controversial mid-1995 move, which discussed the option of running off the insurer's business in Bermuda.

And a 1994 memorandum said to be prepared by EMLICO outside counsel, Chadbourne & Park, included a 1994 flow chart showing what would happen if the company was liquidated in Massachusetts, after posting reserves for huge GE pollution and toxic tort claims.

Said Mr. McCullough: "She had submitted a brief in support of the US Attorney, who had subpoenaed those documents from Kemper Re. In that brief she said the documents were not privileged, as GE claimed. GE has been trying to get back those documents because they are so damning.

"But as a part of this agreement, she has suddenly withdrawn that brief. Not only is she abandoning her investigation, she is taking steps to help GE keep secret key information regarding the alleged fraud.'' He said it is also troubling that other information she gathered in her investigation prior to the settlement would also now remain confidential, after having had "GE on the ropes''.

Mr. McCullough said: "Since October when she assured legislators she would get to the bottom of things, there has been more evidence of fraud.

"And joint liquidators were involved with GE and EMLICO in 1994 prior to the redomestication, almost a year before the company was declared insolvent.'' `EFFICIENT RESOLUTION' -- Joint liquidator David Lines