The Massachusetts Senate Committee on Post Audit and Oversight has formally asked the state's insurance regulators for answers to probing questions surrounding the move to Bermuda of Electric Mutual Liability Insurance Co.

(EMLICO).

The Post Audit committee, in a detailed, five page letter, has laid out some 45 incisive questions, seeking virtually the entire file of documents held by Massachusetts regulators on the Bermuda registered insurer.

The committee members have asked for copies of the information EMLICO provided to the state's Division of Insurance when applying for regulatory approval to leave the state and are seeking a complete understanding of what role the division played in the lead-up to granting approval.

They also have asked about division actions since the redomestication was approved, and have asked for documents that have been exchanged with Bermuda regulators or Bermuda courts.

EMLICO moved to Bermuda in the summer of 1995, after approvals were obtained from Bermuda regulators and the Division of Insurance. Four months after arriving here, they filed for bankruptcy.

Reinsurers claim a deliberate and fraudulent scheme on the part of the company and its parent, General Electric Co. (GE), to win approval for the redomestication from Beverly, Massachusetts, because of an advantage that could be obtained from a Bermuda liquidation.

Reinsurers claim that a liquidation in Bermuda, as opposed to the US, favours GE but amounts to a financial penalty for reinsurers, because of the control that could be exercised over the liquidation by GE, as the sole creditor.

GE and EMLICO's liquidators have denied the allegations and countered that reinsurers were simply trying to avoid their contractual obligations.

The liquidators are David Lines and Peter Mitchell of Coopers & Lybrand Bermuda and Christopher Hughes of Coopers & Lybrand London.

They have already managed to negotiate settlements over the dispute with some significant reinsurers, who have now withdrawn from substantial ongoing litigation.

The EMLICO liquidators and GE remain at odds, however, with Kemper Re and a number of London underwriters.

SENATE SEN