Electric Mutual Liability Insurance Co.'s move to Bermuda.

In dismissing complaints by Lloyd's of London, Kemper Reinsurance and General Reinsurance, the Superior Court of Massachusetts said Wednesday that reinsurers are debtors of EMLICO.

The court also said that reinsurers have no right to challenge the Massachusetts insurance commission decision allowing EMLICO's move to Bermuda.

The US court also said Bermuda liquidation laws conform to US laws.

Reinsurers want the redomestication reversed. They say EMLICO, aware it was insolvent, left the US for Bermuda to take advantage of what they said were more favourable insolvency regulations.

"This is another example of GE and its allies relying on a technicality to avoid a trial into the fraud issue,'' a spokesperson for one of the reinsurers said. He preferred The Royal Gazette not name him or the company he is with.

The loophole being that only creditors can complain about fraud, he said.

"Clearly this is not what the Massachusetts legislature intended and the Massachusetts legislature is considering legislation to close the loophole.

The judge did not say (Wednesday) there was no fraud.'' The spokesperson also said reinsurers are considering appealing the latest decision.

EMLICO said the decision "paves the way for the efficient resolution of EMLICO's liabilities''.

EMLICO also said the Massachusetts court found: "Bermuda law relating to liquidation proceedings is in substantial conformity with our laws, (is) fully supervised by the Bermuda Supreme Court (and) provides a comprehensive and orderly procedure for liquidation that includes a procedure for appeal.

"The Superior Court ruled that the reinsurers are not policyholders of the company and fall outside the zone of interest intended to be protected by the redomestication statute.'' The decision said reinsurer's rights were not prejudiced by EMLICO's move to Bermuda and confirms GE's position since the onset, GE said.

This is the third ruling that said allegations do not deserve court review. In July, the Bermuda Supreme Court found that EMLICO should be liquidated in Bermuda. In December, the same court rejected a complaint challenging EMLICO's move to Bermuda.

"Now, the Massachusetts court has similarly found that redomestication did not effect the rights of EMLICO's reinsurers,'' GE said.

The court also found that plaintiffs have no contractual or statutory right to condition EMLICO's reorganisation on obtaining their approval. The court concluded that the complaints have not stated a claim that the reorganisation and redomestication will prejudice a substantial right of the plaintiffs.

Earlier this year, EMLICO reached a settlement with the Massachusetts Division of Insurance under which the insurance commissioner would be receiver while the liquidation would go ahead in Bermuda.

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