Travelers In $245 Million Settlement With Equitas

By Daniel Hays

NU Online News Service, March 22, 11:14 a.m.EST?Equitas has agreed to pay Travelers Property CasualtyCorp. $245 million to settle reinsurance claims, the bulk of theminvolving asbestos injury, Equitas announced today.[@@]

Equitas said payment for comprehensive settlement betweenTravelers and Lloyd's of London underwriters reinsured by Equitaswould made by Equitas on March 31.

Equitas said the payment will resolve all current and futureclaims made both by Travelers against reinsured underwriters and byreinsured underwriters against Travelers. The agreement includesall policies involving the former Aetna property-casualty companiesacquired by Travelers in 1996.

A spokesperson for Travelers in Hartford, Conn. said the claimsinvolved had been generated by "a range of commercial linesclients, third-party liability insureds that were covered by theformer Aetna and Travelers in 1992 and prior."

As part of the agreement, $150 million of the payment,representing the amount relating to asbestos bodily injury claims,has been placed in a Trust. Equitas said it has the option to takeback those funds in the event Congress passes asbestos legislation.Were that to happen the non-asbestos part of the settlement wouldbe unaffected.

Glenn Brace, Equitas claims director said the settlement is anencouraging result for the company that is running off Lloyd's 1992and prior claims.[@@]

"In January, we concluded an agreement with Halliburton thatresolved our largest direct asbestos exposure," he noted. With thislatest settlement, we resolve our largest reinsuranceexposure."

Mr. Brace said, "While we recognize that some parties may needor prefer to deal with Equitas on a transaction-by-transactionbasis, perhaps even over many years, we believe global agreementsare better economically for both parties and we remain committed toagreeing global settlements with counter parties wherever wecan."

An Equitas spokesperson said the settlement involved "nothingsignificant" in the way of disputes. "The reason for the deal isboth parties are seeking certainty" for long-tail claims.

Referring to the trust arrangement to cover asbestos claims, heexplained that in the event of legislation by Congress, "we'reprotecting our interest getting full credit for what we'vesettled."

Equitas, based in London, was established to reinsure andrun-off the 1992 and prior years' non-life liabilities of Names, orUnderwriters, at Lloyd's of London. Equitas actively manages thenon-life liabilities arising from policies written by Lloyd'ssyndicates in 1992 and prior years.

Before the settlement Travelers said in its form 10-K filingwith Securities Exchange Commission that as of Dec. 31, 2003 therewas "$269.1 million recoverable from Equitas.

The company said that at Dec.31 2003 it had an allowance forestimated uncollectible reinsurance recoverables of $386.4.