EMLICO controversy hurting Island's image -- US magazine A Massachusetts Senate's insurance committee chairwoman's demand for the attorney general to withdraw as the state's counsel in the controversial EMLICO case has been swatted down.

The Boston Globe has reported that an aide to attorney general Scott Harshbarger also brushed aside the request for a fraud investigation into EMLICO, in connection with its move from the US to Bermuda in the summer of 1995.

But the aide said his office still maintains the right to probe fraud charges.

The case, which remains in the courts here and in the US, has taken on a life of its own, with a recent Reactions magazine stating that the EMLICO affair has been "calling Bermuda's reputation as an insurance domicile into question.'' Under a headline "The protracted death of EMLICO'' they reported: "Publicly, the powers that be on the Island have refrained from comment, but in private they are angry at what they see as an attempt by EMLICO's reinsurers to tarnish Bermuda's name as part of a vigorous campaign designed entirely to avoid meeting their obligations to the company.'' They reported: "The adverse publicity for Bermuda over EMLICO adds to what was generated by Bermuda Fire & Marine, the local company which divested its foreign liabilities before they were put into liquidation to the indignation of US creditors.

"You have to worry about your reputation when Standard & Poor's commits this observation to print: "Unfortunately, the bankruptcy filing of the newly domesticated Electric Mutual Liability Insurance Co. once again raised concerns about the level of regulatory supervision accorded Bermuda-registered insurers.'' The article said that the response in Bermuda was that S&P was not expressing its own opinion but was merely noting that EMLICO was causing others to have doubts. And the doubts, according to Bermudian sources, are the consequence of the EMLICO reinsurers' campaign, alleging "a masterful job in controlling the press''.

COURTS CTS NEWSPAPER NJ