Massachusetts legislators are applying pressure to the state's insurance regulator to postpone or abandon a settlement proposal negotiated in the case of Bermuda-domiciled Electric Mutual Liability Insurance Co. (EMLICO).

In recent days, commissioner of the Division of Insurance (DOI), Linda L.

Ruthardt, has heard from officials from the Massachusetts Senate and the House of Representatives, asking for a delay of her intended course of action.

State representative, Paul Kujawski, wrote to the commissioner, expressing concern over a legislative subpoena issued against the DOI, demanding documents relating to EMLICO's controversial move from Massachusetts to Bermuda.

The subpoena came from the House Post Audit and Oversight Committee. The requested documents have already generated much interest.

Mr. Kujawski stated: "In light of the pending investigation by the (House) Committee, and the obvious gravity of the EMLICO situation, I would like to request that you refrain from pursuing the Court's approval of the settlement that you recently negotiated with EMLICO, EIC (EMLICO affiliate Electric Insurance Co.) and GE (General Electric).'' And state senator Michael W. Morrissey wrote: "As a state senator, it would seem to me rather than going ahead with the proposed settlement (which I understand was negotiated behind closed doors and is hotly contested), the most prudent thing to do would be to maintain the status quo.

"Accordingly, I would like to request that you postpone the May 6 hearing at which the Supreme Judicial Court will consider whether to approve the settlement that would establish a US receivership of EMLICO.'' EMLICO is a 70-year old insurer founded by General Electric Co. which wrote environmental business. GE was the main policyholder and now is the main creditor.

Reinsurers said that EMLICO was knowingly insolvent and was moved to Bermuda specifically to stick reinsurers with hundreds of millions of dollars worth of environmental claims.

EMLICO and GE have denied they knew the company would become insolvent, and have denied serious allegations of fraud that have been levelled by their reinsurers.

Bermuda liquidators at Coopers & Lybrand have sought to expedite a liquidation, with mounting concern being raised by reinsurers and others over how EMLICO was given the green light to leave Massachusetts and redomesticate to Bermuda.

Joining EMLICO at the centre of this controversy is the DOI and Ms Ruthardt.

She has a date in May with the Massachusetts judge seeking approval of an agreement she hashed out during private meetings with GE, EMLICO and EIC -- an agreement that reinsurers complain they were never invited to be a party to, and which they oppose.

It would allow the liquidation to continue in Bermuda and establish a US receivership in Massachusetts. Reinsurers argued that such an approval would by-pass their allegations of fraud against GE and EMLICO and allow them to control the liquidation.

COURTS CTS