The Massachusetts commissioner of insurance has been asked by the Supreme Judicial Court for documented proof that Bermuda-domiciled Electric Mutual Liability Insurance Co. (EMLICO) was still under the jurisdiction of the court, after EMLICO moved to Bermuda July 1, 1995.

The request came after EMLICO reinsurer, Kemper Re, argued in a letter to the court dated May 21, that EMLICO was "never qualified to do business in Massachusetts as a Bermuda company...'' The court said in a May 28 position that "in order to complete the record on the issue of jurisdiction'' the documentation was requested by this week Thursday.

EMLICO, the long-time Massachusetts insurer of General Electric Co. (GE), moved "good'' business into affiliate insurer, Electric Insurance Co. (EIC) in the summer of 1995, then moved to Bermuda less than four months before initiating insolvency proceedings.

The insolvency came about because the company was reportedly overwhelmed by environmental pollution claims through its sole policyholder, GE. The liquidation is being handled by Cooper & Lines in Bermuda.

Some of EMLICO's reinsurers have claimed EMLICO and GE committed fraud, and knew before leaving the US the insurer was insolvent. The reinsurers claim the insurer deceived Bermuda and Massachusetts regulators into believing EMLICO was solvent, so that the move would be approved.

Reinsurers said they stand to lose hundreds of millions of dollars, partly because of a deliberate scheme to move an insolvent insurer to a "more creditor-friendly'' jurisdiction, where reinsurers would be forced to pay out more and more quickly.

EMLICO and GE say the reinsurers are just trying to escape payments under contractual obligations. Bermuda regulators have denied being deceived.

The commissioner of insurance in Massachusetts negotiated with EMLICO liquidators and GE a settlement agreement to establish a US receivership of EMLICO, even though it is in liquidation in Bermuda.

The deal is believed to have the backing of the Bermuda Supreme Court, although reinsurers, who were not consulted, are vehemently opposed.

Justice Greaney is presiding over the latest EMLICO litigation in Massachusetts, in which the Commissioner is seeking court approval for that proposed settlement agreement.

EMLICO's reinsurers have argued that the court's jurisdiction to entertain the commissioner's petition is "dependent upon the existence of EMLICO's lawful authority to do business in Massachusetts after it ceased to be a domestic company and became an alien company organised under the laws of Bermuda.'' They said, in briefs filed in court, that EMLICO could only be authorised to do business in Massachusetts after the move to Bermuda, if it became qualified as a "foreign'' company. They claimed that no such evidence exists to prove that qualification.

Last week, Justice Greaney called upon the Commissioner, Linda Ruthardt, "to furnish the court with whatever documentation exists showing that EMLICO met the requirements for qualification of a foreign company'' between July 1, 1995 and October 29, 1995.

Alternatively, the judge asks for documentation showing EMLICO was issued a foreign company licence.

The May 28 court order continued: "If no such documentation or licence exists, I would ask the commissioner to so affirm, and I shall decide the jurisdiction issue on the basis of her assertion'' that EMLICO's authority to do business in Massachusetts was implicit until the day it filed for insolvency in Bermuda.

The judge said he would also consider the contrary assertions by Kemper Re and other reinsurers.

Kemper Re's May 21 letter to the court argued that there remain deficiencies in the commissioner's "proof'' that EMLICO continued to be authorised to do business in Massachusetts.