A major portion of the dispute that blew up over the move to Bermuda by the General Electric Co. (GE) Massachusetts insurer, Electric Mutual Liability Insurance Co. (EMLICO), appears to have been resolved.

Key elements of a complicated legal battle, that eventually led to a jurisdictional conflict between Bermuda and US authorities, may be heading for an end, with word that EMLICO's Bermuda liquidators and their major opponents, Illinois-based Kemper Re, have come to terms.

But it still leaves in dispute, the jurisdictional issues that appear headed back to court on Wednesday. And it remained uncertain on Friday, whether or not allegations against GE and EMLICO of fraud will ever be tested.

Kemper Insurance Companies led several reinsurers in the battle against the insurer's 1995 move to Bermuda and subsequent liquidation, claiming it would force them to pay millions -- potentially hundreds of millions of dollars more -- than in a US liquidation, because of the differences of liquidation procedures in the two countries.

They had alleged that GE and EMLICO had practised fraud on insurance regulators in both jurisdictions by concealing their insolvency until four months after arriving in Bermuda.

The insurer became insolvent because of hundreds of millions of dollars -- and potentially billions -- in asbestos-related and other pollution claims from GE, which was being forced to clean up hundreds of US sites where they had long dumped toxic waste.

The joint liquidators of EMLICO are David E.W. Lines and Peter C.B. Cooper of Coopers & Lybrand Bermuda and their London partner Christopher Hughes.

A joint statement circulated late Friday by Kemper, the liquidators and GE said the three parties have reached an agreement, resolving reinsurance disputes between Kemper Insurance Companies and EMLICO, as well as direct insurance claims between GE and the Kemper Insurance Companies.

Terms of the agreement were not disclosed.

The parties said the agreement represents "a fair and equitable resolution of their disputed claims. Furthermore, the parties agreed that it was in their best interests to resolve their disputes in a commercially reasonable manner without further expense or delay.

"The settlement ends all litigation brought by the Kemper Insurance Companies against EMLICO and GE in both the United States and Bermuda.'' The announcement leaves EMLICO's liquidators still at odds with London reinsurers, who along with Kemper, and initially other reinsurers, had challenged the EMLICO 1995 redomestication from Beverly, Massachusetts to Bermuda.

But it also left in limbo the jurisdictional battle for the company that is claimed by two jurisdictions. Bermudian authorities have said that EMLICO Ltd.

is a Bermuda incorporated company, under a liquidation order of the Bermuda Supreme Court.

But the Massachusetts commissioner of insurance Linda Ruthardt is fighting to take control of EMLICO after the state's Supreme Judicial Court ruled just this year that EMLICO remained a Massachusetts insurer and never left the state.

The commissioner is obligated to take control of state insurers that become insolvent. The state court further ruled that she had no authority in 1995 to approve the insurer's move out of the state, and in effect, it never left.

She wants to be appointed EMLICO's receiver, so that she can come to Bermuda and seek control of EMLICO's liquidation and its assets.

The case takes centre stage again Wednesday in a federal court in Massachusetts before Justice Woodlock, with the Commissioner trying to have the hearing removed to state court, where it originated.

It had been moved to federal court by the Bermuda liquidators, after the commissioner sought from the state court a receivership order placing EMLICO under her care.

Earlier, other reinsurers, Allstate Insurance and General Re, settled with GE and EMLICO privately.

David Lines COURTS CTS