allow a proposed settlement of the controversial Electric Mutual Liability Insurance Co. (EMLICO) row.

The deal, proposed by Massachusetts Commissioner of Insurance, Linda L.

Ruthardt, would see EMLICO liquidated in Bermuda under a receiverships established in Massachusetts.

EMLICO moved to Bermuda from Massachusetts in 1995 and later went into liquidation with liabilities of more than $500 million. Reinsurers claim that the company knew it was insolvent before it moved to Bermuda, which they say is more "creditor-friendly'' than Massachusetts.

During a 90-minute hearing on Tuesday, Massachusetts Justice Greaney said he would wait until next week Friday for those involved to file any final papers in the controversial case.

It is expected that it will be several days, if not weeks, before the court renders a ruling.

Also on Tuesday, the Senate chairwoman of the Massachusetts Legislature's joint committee on insurance wrote to the Attorney General in Boston, asking that he withdraw his counsel from representing the commissioner's division of insurance (DOI).

Senator Dianne Wilkerson claimed that during a February meeting with the commissioner at the DOI, she was briefed by Ms Ruthardt and her special counsel about the settlement negotiations between the DOI and EMLICO.

Senator Wilkerson stated: "After listening to the proposed settlement structure, I stated to the commissioner and her counsel that it was important to me to know that they acknowledged that misrepresentations had consciously and clearly been made to the DOI by EMLICO in the course of its application for redomestication.

"The commissioner stated to me unequivocally that it was clear to her that EMLICO had not been forthcoming in its application and further that they clearly knew more than they stated about their financial condition at the time of the application (to redomesticate).

"I inquired whether that meant that the DOI was giving up its right to pursue the fraud perpetrated upon it. The response of both the commissioner and her counsel was yes, as that was a condition of the settlement.'' Sen. Wilkerson also wrote: "If the commissioner believes misrepresentations were made to the division by EMLICO to redomesticate to Bermuda, as the chief law enforcement officer in the Commonwealth, why are you allowing the commissioner to negotiate away her investigatory powers and provide release to those who may have committed the fraud?'' The proposed settlement has already been approved by EMLICO, its founder and principal policy holder, General Electric Co. (GE) and related insurer, Electric Insurance Co. (EIC).

The proponents previously argued that the proposal would expire if not adopted by May 12. There was no word yesterday if that self-imposed deadline would be extended.

The proposal is opposed by EMLICO's reinsurers, which include more than 200 companies led by Kemper Re and Hanover Re.

Kemper last month lost a decision in superior court, when Justice King sided with Commissioner Ruthardt and others in a matter brought by Kemper.

Justice King agreed that the reinsurers lacked standing in their application for a review of the commissioner's decision to approve EMLICO's application to redomesticate from Massachusetts to Bermuda in the summer of 1995.

That summer the company satisfied regulators in Massachusetts and in Bermuda that it was solvent. But four months later, it applied to the Supreme Court to be wound up, saying that it was insolvent by half a billion dollars.

Last month the court ruled that the reinsurers' complaints "fail to state a cognisable injury'' directly related to the commissioner's decision and fail to state that the plaintiffs are within the zone of protection or area of concern.

Even though the reinsurers argued that they could show harmful consequences to themselves as a result of the decision, the allegations are insufficient to provide them standing to seek a review of the redomestication decision.

Justice King wrote: "Alleging injury is not enough; a plaintiff must allege breach of a duty owed to it by the public defendant.'' He said the statute under which the commissioner allowed EMLICO to move mandates the commissioner to consider the best interests of the policyholders.

Reinsurers are not policyholders.

Reinsurers allege that by coming to Bermuda, GE would be allowed to control the liquidation of EMLICO in ways not permitted in Massachusetts. They further allege that the two companies expected that in a Bermuda liquidation, they would be able to inflate and accelerate GE's claims against EMLICO and thereby enable EMLICO to accelerate and inflate its claims against the plaintiff reinsurers.

Justice King, however, accepted a 1995 court ruling that held that Bermuda has a well established body of insurance law.

COURTS CTS