A leading insurance trade publication has now pointed an accusatory finger at the Bermuda Government in the controversy surrounding General Electric Company's (GE) Bermuda-domiciled insurer, EMLICO (Electric Mutual Liability Insurance Co.).

Business Insurance (BI) on Monday published an article criticising Bermuda regulators for ignoring the EMLICO issue, and, is telling international companies they should be concerned about it.

The BI article stated: "The Bermuda government has steadfastly maintained that this was Massachusetts' problem to solve. While Bermuda authorities could have undertaken their own investigation, they did nothing; they appear instead to agree with EMLICO that this is a mere business dispute and seem content to gain the jobs the EMLICO liquidation will generate.

"Even if Bermuda regulators didn't believe they were deceived in the redomestication, though, they should not have remained inert when evidence suggested their US counterparts were duped.

"Bermuda's hands-off attitude in this case should be a concern to all companies -- particularly reinsurers -- that do business in the domicile.'' And in the same edition, BI reports that Lloyd's of London underwriters are seeking to be heard in the Massachusetts court that will decide whether to accept the state insurance Commissioner's proposal to resolve the EMLICO dispute ( The Royal Gazette , March 18 p.12, March 21 p.19).

They want to argue against a settlement agreement proposed by Commissioner Linda Ruthardt of the Division of Insurance that satisfies none of the desires of reinsurers, and which may abandon regulatory interest in the allegations of fraud.

Lloyd's has complained in its court filings that the settlement fails to "hold GE or EMLICO accountable for the damage to public confidence in the integrity of the Commonwealth's insurance regulatory process since, despite the evidence and preliminary findings of fraud, GE and EMLICO will continue to reap the benefits of their fraudulent redomestication to Bermuda.'' The filing also complains that Ms Ruthardt has hidden her regulatory actions leading up to the announced settlement, including side deals that do not appear as part of the agreement.

Much like Kemper Re, another unhappy reinsurer, Lloyd's wants to intervene and halt the April 8 hearing before the state's Supreme Judicial Court that could approve the settlement agreement.

But they are not the only ones who are against the agreement. Another trade publication, Insurance Times, last week quoted influential state lawmaker, Sen. Dianne Wilkerson, D-Boston in agreement with the reinsurers' wish that EMLICO should be returned to Massachusetts to face charges of fraud and misrepresentation.

The Senate insurance committee chairwoman is quoted: "I want them back.

That's the bottom line.'' Insurance Times described Bermuda as having "less stringent liquidation procedures''.

And The Standard, New England's Insurance Weekly, criticises the proposed settlement agreement as accomplishing nothing of substance.

They said the biggest issues relating to EMLICO were the concerns of the reinsurers and whether fraud had been perpetrated by the company against the division of insurance.

It concluded: "The Division's deal resolves neither of these issues.'' The Standard added that it appeared "the Division had failed to grasp which issues are the most important ones in this episode. Instead of addressing the central question of whether it erred or was the victim of fraud, the Division focused on securing a role in the liquidation (which some have suggested is not strong enough) and on getting reaffirmations of past agreements.

"Unfortunately, the settlement leaves too many questions unanswered and raises at least one new one -- whether the Division of Insurance has been duped again.'' And a federal grand jury probe into allegations that include fraud could now possibly target two former EMLICO executives, EIC president David F. St.

Laurent and EIC treasurer Laurence J. Cohen.

They had previously refused to answer questions of the Commissioner, when she began a probe into fraud charges as part of her examination of EIC.

They also are possible subjects in a probe being conducted by the US Attorney's office in Boston, according to a lawyer for Electric Insurance Co.

(EIC).

EIC is the EMLICO subsidiary, which took possession of EMLICO's "good business'', when they moved to Bermuda in mid 1995. A few months later, EMLICO declared itself insolvent and reinsurers became enraged.

They argued that GE and EMLICO bosses knew they were insolvent before moving from Massachusetts, and conspired to move to Bermuda to take advantage of Bermuda's liquidation laws. The reinsurers believe the scheme was designed to make reinsurers pay larger sums in the liquidation, than they would have if the insurer became insolvent in Massachusetts.

BUSINESS BUC