Travelers Settles Some Asbestos Class Actions

In papers filed with one of the cases in West Virginia, plaintiffs asked for compensatory and punitive damages alleging that insurers had acted "maliciously" using "fraud, deceit and outright lies" designing and orchestrating their claims settlement practices to "intentionally delay" and raised defenses that they knew would never succeed to achieve a goal of settling claims for less money.

The class action settlement, if it receives court approval, would fully resolve all pending asbestos-related statutory direct actions against Travelers, including Wise v. Travelers and Meninger v. Travelers, according to the insurer.

Travelers said this settlement would also bar all future asbestos-related statutory direct actions against Travelers in West Virginia, Massachusetts and other states in which Travelers believes plaintiffs may try to bring such actions.

In an interview last year, a partner in the Wheeling, W. Va. law firm Hartley O'Brien Parson Thompson & Hill, which prosecuted the Wise action, said the unfair claim and trade practices law on which the case was based only exists in West Virginia, Massachusetts, Montana and Kentucky.

The insurer said that the settlement also provides that actions filed in Hawaii against Travelers, based on similar allegations, would be dismissed with prejudice. The proposed settlement is subject to a number of significant contingencies, including, among others, negotiation of a definitive settlement agreement and final court approval, the company advised.

Travelers said the settlement does not end cases against the company involving so-called common-law asbestos-related direct actions against Travelers, which allege the insurer as a result of workplace safety inspections and other underwriting activity, knew but failed to warn of the dangers of asbestos dust-violating a duty to make public the hazard.

Travelers said a temporary restraining order issued in 2002 by the New York federal bankruptcy court staying these direct action cases has been extended until March 2004, at which time Travelers' motion for a permanent injunction will be considered. The company noted that other insurers have recently received favorable rulings in a number of these types of cases in Texas.

"I'm pleased with the progress we continue to make in reducing our asbestos-related exposures," said Robert I. Lipp, Travelers chairman and chief executive officer, "This settlement is consistent with our long history of seeking early favorable resolution of asbestos disputes."

Travelers said it will fund the settlement from its unallocated asbestos reserves and does not anticipate taking an earnings charge as a result of this settlement.