reinsurers.

Another reinsurer, Hannover Re, is ending a long running fight with Bermuda-registered Electric Mutual Liability Insurance Co. Ltd. (EMLICO) and its founder and sole policyholder, General Electric Co. (GE).

The move comes as the Supreme Judicial Court of Suffolk County was set to adjudicate over one aspect of the controversial case.

Before the Massachusetts courts is a settlement agreement proposed by the Massachusetts insurance commissioner that would establish her as a US receiver for the ongoing Bermuda liquidation.

But a county court judge ruled in June that the EMLICO dispute is so controversial, and potential claims are so large, that the full Massachusetts Supreme Judicial Court should preside over a side issue.

Possibly as early as next month, the full court was to hear oral arguments on whether or not the state insurance commissioner had the power to permit EMLICO to relocate to Bermuda under legislation which permits redomestication only to "any other state''.

Reinsurers, including Hannover Re, had been given until August 22 to enter written submissions to the court.

But Hannover Ru pckversicherungs-Aktiengesellschaft (Hannover Re) said this week that it has entered into a contract buyback or commutation with the joint liquidators of Electric Mutual Liability Insurance Co. Ltd.

The joint liquidators are Bermudians David Lines and Peter C.B. Mitchell of Coopers & Lybrand Bermuda and Gareth Hughes of Coopers & Lybrand London.

Hannover Re was one of the major players in a messy controversy over EMLICO's flight from Massachusetts to Bermuda, which preceded by about four months its filing for bankruptcy in 1995.

Hannover Re said in a brief, prepared statement that the parties have agreed to withdraw from all ongoing arbitration and litigation.

The German reinsurer said this week that by agreement, the specific terms of the commutation are confidential.

A group of reinsurers had lined up against EMLICO claiming that the insurer and GE knew EMLICO was soon to be insolvent because of billions of dollars in liability claims from GE, but hid the fact from Massachusetts and Bermudian insurance regulators.

The reinsurers had argued that EMLICO was moved to Bermuda because of subtle differences in insurance regulations that would force the reinsurers to pay up at an accelerated rate.

The allegations have been denied by GE and EMLICO, who have countered that reinsurers are just trying to get out of their contractual obligations.

Already AllState Insurance Co. and three reinsurers in the General Re Group of companies have backed out of the dispute and made private settlement arrangements with GE and EMLICO's liquidators.

The most significant reinsurers remaining are Kemper Re and underwriters at Lloyd's of London. Kemper had led the charge in litigation in Bermuda and the US against GE and EMLICO.

The reinsurers had opposed the settlement agreement proposed by Massachusetts insurance commissioner, Linda Ruthardt, arguing that EMLICO should be returned to Massachusetts to face liquidation.

They argued that if the company was allowed to move to Bermuda only because regulators were deceived, the permission was obtained fraudulently and therefore should be rescinded.

Bermudian regulators have said they were not deceived and knew of the potential for an EMLICO insolvency. Massachusetts regulators have conceded that EMLICO and GE may have been less than candid with them.

Hannover Re's decision to excise itself from a confrontation that already has the attention of US law enforcement agencies and Massachusetts legislators comes after the German reinsurer said in court filings a little more than three months ago that EMLICO's move to Bermuda in 1995 was "carefully concealed''.

On May 2, in filings before the Supreme Judicial Court for Suffolk County, Hannover Re objected to the commissioner's settlement agreement and said there were "suspicious circumstances surrounding EMLICO's flight offshore''.

They alleged at the time that their investigation of the issue led to the uncovering of evidence that EMLICO and GE "had devised a clever scheme improperly to allow GE to accomplish what it never could have accomplished in a Massachusetts insolvency proceeding -- effective control of the liquidators' handling of its massive pollution and asbestos claims, which would enable it to inflate and accelerate its claims against EMLICO, at the direct and great expense of EMLICO's reinsurers.'' In fact, Hannover Re had contended on January 9, 1996 in a demand for arbitration that EMLICO's move to Bermuda was unlawful, for the sole benefit of its parent and sole creditor, GE, and was fraud.

Mr. David Lines