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 Casualty Corp. $245 million to settle reinsurance claims, the bulk of them involving asbestos injury, Equitas announced today.[@@]

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

Equitas said the payment will resolve all current and future claims made both by Travelers against reinsured underwriters and by reinsured underwriters against Travelers. The agreement includes all policies involving the former Aetna property-casualty companies acquired by Travelers in 1996.

A spokesperson for Travelers in Hartford, Conn. said the claims involved had been generated by "a range of commercial lines clients, third-party liability insureds that were covered by the former 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 take back those funds in the event Congress passes asbestos legislation. Were that to happen the non-asbestos part of the settlement would be unaffected.

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

"In January, we concluded an agreement with Halliburton that resolved our largest direct asbestos exposure," he noted. With this latest settlement, we resolve our largest reinsurance exposure."

Mr. Brace said, "While we recognize that some parties may need or prefer to deal with Equitas on a transaction-by-transaction basis, perhaps even over many years, we believe global agreements are better economically for both parties and we remain committed to agreeing global settlements with counter parties wherever we can."

An Equitas spokesperson said the settlement involved "nothing significant" in the way of disputes. "The reason for the deal is both parties are seeking certainty" for long-tail claims.

Referring to the trust arrangement to cover asbestos claims, he explained that in the event of legislation by Congress, "we're protecting our interest getting full credit for what we've settled."

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

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

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

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Travelers In $245 Million Settlement With Equitas

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