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Insurance documents at centre of growing spat

Mutual Liability Insurance Company's (EMLICO) controversial move to Bermuda made public were this week given a new round of ammunition.

Massachusetts attorney general Scott Harshbarger told state insurance commissioner Linda Ruthardt he will no longer represent her division in a legal fight with the Cambridge-based Center for Insurance Research over a State Mutual Life Assurance Co. of Worcester stock offering, the Boston Globe said on Wednesday.

The move is unusual because the attorney general is supposed to represent the insurance commissioner.

If the attorney general is pulling counsel on the State Mutual matter, he may be considering a similar move on EMLICO.

A spokesman at the Massachusetts attorney general's office was not available for comment. But the attorney general's office has expressed "serious concern'' on state insurance division conduct -- the same division that approved EMLICO's controversial redomestication to Bermuda.

The Boston Globe's story leads with -- "Scott Harshbarger to Linda Ruthardt: Get yourself a new lawyer.'' The attorney general's office, charged with representing state agencies in court said it will no longer represent the insurance division on the State Mutual matter because "the division provided us with inaccurate information.'' Under the Massachusetts Public Records Act, the Center for Insurance Research, a Cambridge-based non profit consumer advocacy organisation, is suing the state's insurance division for access to documents on State Mutual.

The Center is also suing for documents on EMLICO's move to Bermuda.

Both matters are about making insurance division documents public.

The Boston Globe said it had obtained three letters in which the attorney general's office expressed "serious concern'' about the "ethical issues'' raised by the insurance division's conduct.

Wednesday's development creates doubt as to whether or not Mr. Harshbarger's office will continue to represent the division on the EMLICO matter, a lawyer for one of EMLICO's reinsurers said. He preferred not to be named. He also preferred the reinsurer that is his client not be named.

Center for Insurance Research staff lawyer Rich Dubois said: "We have a lawsuit against the commissioner on EMLICO's redomestication. She has refused to hand over documents. The attorney general has been representing her in that case.

"The attorney general is thinking about his future representation of this insurance commissioner.'' And though the Center has not been notified of any moves linked to EMLICO, the attorney's general's pulling counsel on the State Mutual matter calls into question "the conduct of the commissioner generally,'' he added.

Opponents of EMLICO's move claim that once it was learned that EMLICO, a General Electric company, was insolvent, EMLICO was moved to Bermuda fraudulently.

Wednesday's development comes just days after a Massachusetts court found that reinsurers are debtors of EMLICO and without standing to challenge the redomestication -- a victory for General Electric.

Lawyers for the reinsurers are attempting to have the legislation changed.