Investigators retained by the board of Ullico Inc., the union-owned insurance company under investigation for alleged insider stock trading, have "strongly" recommended that officers and directors who profited from stock buybacks be required to return $5.6 million in profits, according to a copy of their report obtained by The Washington Post.

The report, which has been kept under wraps since being presented to the board last November, found no evidence of criminal wrongdoing in transactions that benefited chairman and chief executive Robert A. Georgine and others. But it found "a compelling argument" that some directors may have violated civil laws that might require them to repay what they earned in "self-interested" transactions.

The report lays out a pattern of questionable decisions that allowed Georgine and 19 other Ullico directors and officers, who collectively owned less than 2 percent of the company's stock, to earn more than $13.7 million under stock buyback programs while pension funds that owned more than 90 percent of the stock earned only $28 million. Georgine's pretax profits were $837,760.

Prepared by law firm Winston & Strawn under the direction of former Illinois governor James R. Thompson (R), the report questions justifications that directors gave for transactions that were the subject of the investigation. The transactions also are under investigation by the U.S. attorney in the District, the Labor Department, the Securities and Exchange Commission and the Maryland insurance commissioner.

The report noted that Georgine and others acquired stock under a program that allowed each director and senior officer -- and no other investors -- to buy stock at $28.70 a share in 1998 and $53.94 in 1999. A short time later they were able to sell the shares at $146.40.

Ullico's stock price was based on its book value, which rocketed as a result of a large run-up in the price of the stock of telecommunications concern Global Crossing Ltd., in which it had a large investment. The company's 2000 stock repurchase program allowed smaller shareholders, including officers and directors, to sell back all of their shares while the largest shareholders, such as pension funds, were limited in how many shares they could sell.

Shortly thereafter, the value of Ullico shares declined sharply along with the value of Global Crossing, which eventually filed for bankruptcy protection.

"The stated purpose for the stock offers . . . was to align the interests of officers and directors with shareholders," the report said. It noted that "any 'alignment' of interest was very short-lived since almost 90 percent of the shares purchased by directors and officers in 1998 and 1999 were repurchased by the company by January 2001."

Georgine, the person most severely criticized in the Thompson report, may retire before the company's annual meeting in May, according to sources at the company. At a board meeting last week, Georgine, former president of the AFL-CIO's Building and Construction Trades Department, offered to retire, but the board gave him a vote of confidence and rejected his offer.

In addition, sources said, Georgine offered at the meeting to return the profits he had made from the stock transactions, but a reported majority of members of the board sought to dissuade him. The matter was not resolved and may be taken up again today if the board meets as planned.

John Rogers, a spokesman for Ullico, said Georgine would not comment on the report. Instead, he said, the company would stand by a press release issued last week that disputed the Thompson report and sought to absolve officers and directors of any wrongdoing or obligation to return profits.

In the release, Ullico said a special committee appointed by the board determined "that the sale and repurchase of ULLICO shares to corporate officers and board members was conducted in accordance with provisions and procedures developed by legal and accounting professionals; that the actions were based on expert financial advice, with the concurrence of outside legal counsel, and did not violate corporate bylaws or previous board actions; and that the actions were consistent with traditional corporate decision-making procedures."

John J. Sweeney, president of the AFL-CIO and one of a number of labor leaders calling for release of the Thompson report, said through a spokeswoman that he could not comment. "We need to look at the whole report; we are not in a position to comment," he said.

Georgine, the sources said, disclosed that Ullico has over the past eight years built up for him a tax-deferred fund, known as a "Rabbi Trust," that now has $11.2 million in it. The money would allow him to pay back the profits from the stock transactions, sources said.

Asked about these matters, Karen Popp, a lawyer working for Ullico, said she would get back to a reporter, but she did not and failed to return repeated messages left for her at work and at home.

Another key company officer, Joseph A. Carabillo, Ullico's general counsel, has, according to company sources, taken early retirement.

If Georgine retires, the fate of his two sons-in-law, both of whom work for Ullico, would be uncertain. Company sources said one son-in-law, Brian Hechinger, is a vice president in the investment division, and the other, Michael Baugher, is overseeing construction of Ullico's new headquarters.