A reinsurer leading the legal battle to return Bermuda-domiciled Electric Mutual Liability Insurance Co. (EMLICO) to Massachusetts to face insolvency and allegations of fraud, does not believe that decisions by other reinsurers to settle their differences with EMLICO in any way diminishes their case.

Three General Re companies solved their dispute with EMLICO out of court. So did Hannover Re and Allstate Insurance.

But an article in the September issue of Reactions magazine said that Kemper Re remains undaunted by the "defections''. The London magazine spotlights the reinsurance and insurance markets. And in Massachusetts, The Boston Globe reported on Friday that a Kemper Re lawyer claimed in court that General Electric Co. and its insurer EMLICO, were at the centre of "an illicit scheme'' with billions of dollars at stake, with reinsurers as victims.

The Supreme Judicial Court has adjourned to consider crucial elements of a legal battle over EMLICO's future.

The Commissioner of Insurance is seeking court approval to an agreement that would allow a US receivership to EMLICO's Bermuda liquidation.

But three Justices are right now trying to determine if the commissioner had the right to allow EMLICO's move to Bermuda in 1995. Reinsurers claim she did not and want the insurer returned to Massachusetts.

But the newspaper said that the EMLICO issue is only a part of a wider fight between insurers and their reinsurers over who will pay to clean up the environment. It reported: "In an industry that prefers to handle its disagreements quietly in arbitration behind closed doors, this has been an unusually noisy and public affair. But it is increasingly becoming more common in the megabuck battle between insurers and their reinsurers over who will pay to clean up the nation's environmental mess.

"As the huge claims have worked their way through the system, the action, once between the Fortune 100 companies and their insurers, has now shifted to the insurers versus the reinsurers...'' The newspaper said that uncollectible reinsurance was the number one concern among large insurers. They said insurers had ceded one third of the $42 billion in gross reserves designated for asbestos and environmental liabilities.

But Kemper lawyers respond that EMLICO is not your typical dispute between insurer and reinsurer, but rather a case of fraud perpetrated by GE and EMLICO, who knowingly concealed the insurer's insolvency until months after the company was allowed to move to Bermuda. That claim has been hotly denied.

But reinsurers are not the only ones who believe there may be something to the claim. A committee of the state legislature and the US attorney's office continue their probe into allegations of fraud. Reinsurers argue that a Bermuda liquidation, unlike Massachusetts and many other US states, allows liquidators to actuarially estimate the ultimate liabilities of an insolvent insurer, and collect reinsurance claims on that basis. And under Bermuda's laws, the liquidators' chief concern is to pursue the interests of creditors, which means that GE, as the sole policyholder and chief creditor, actually gets to control the liquidation.