were on the offensive in Massachusetts Supreme Judicial Court last week, as they availed themselves of the last chance to reply to briefs filed by reinsurers.

In the running battle between General Electric's liability insurer and their reinsurers over insurance claims that could amount to $2 billion, lawyers for EMLICO liquidators claimed reinsurers refused to be constrained by discrete legal questions or the established appellate record.

The three questions before the court include whether or not the state Commissioner of Insurance demonstrated statutory requirements that would allow her proposed settlement agreement to be considered by the courts on its own merits.

Lawyers for liquidators, David Lines and Peter Mitchell of Coopers & Lybrand Bermuda and Christopher Hughes of Coopers & Lybrand London, said that EMLICO's consent to the deal is all that is needed.

The court will also determine if a state insurer, such as EMLICO, could be allowed to move to a foreign country in view of the law which permits redomestication only "to any other state''.

The liquidators' said the commissioner's view is the only one that advances the policyholder's interest and the regulation of insurance in a global marketplace.

Thirdly, if the answer is no to the last question, what effect does an invalid redomestication have on the legal sufficiency of the commissioner's petition? The liquidators point to the "practical reality'' that the commissioner authorised EMLICO to move to Bermuda, the company did so and is now a Bermuda company.

Their lawyers said reinsurers have "littered their briefs'' with extraneous issues, irrelevant materials, unsupported allegations and emotional attacks on the commissioner, the joint liquidators and GE.

"Thus, the reinsurers,'' lawyers said, "fall back on their twice rejected claims of fraud, even though the Single Justice specifically instructed them that such allegations were not properly before him and had not been reported to the court.

"They fill their supplemental appendices with their own pleadings and newspaper editorials, and then cite to those materials and disputed allegations as if they were proven fact.'' The lawyers argued that these and other "irrelevant arguments'' by reinsurers should be ignored in favour of a clear focus on the merits of the three reported questions.

The case was referred to the full court when a Single Justice sought a broader perspective on key issues, as part of his evaluation of the merits of allowing the commissioner's settlement agreement to proceed.

Court briefs include notes on behalf of liquidators that claim that reinsurers are opposing a settlement agreement that actually gives them additional rights under reinsurance treaties.

The notes said that reinsurers will have five separate opportunities to present their arguments regarding the viability of claims by GE.

EMLICO went bust four months after being moved to Bermuda, under the weight of hundreds of millions of dollars of asbestos and other environmental claims from its parent and sole policyholder, GE.

Reinsurers argue that GE and EMLICO conspired to move an insolvent company to Bermuda to increase the amount of money they can recover from reinsurers, even though regulations in Bermuda and in Massachusetts prohibit such a move for insolvent companies.

GE and EMLICO said they did not know the company to be insolvent until after they moved it, and dubbed the conspiracy theory "outlandish''.

Even after the three Justices rule on these matters, reinsurers still appear to have a long legal road in an attempt to get a hearing on their most serious allegations.

Central to their opposition to the EMLICO liquidation being carried out in Bermuda is their claim that EMLICO and GE exercised fraud in deceiving Bermudian and Massachusetts regulators about the solvency of EMLICO to win approval for the company's move.

They said bermuda liquidation law would force more and earlier payments by the reinsurers to EMLICO.

It is a claim that GE and EMLICO have vehemently denied.

COURTS CTS