Travelers Settles Asbestos Coverup Claims

Travelers Settles Asbestos Coverup Claims

By Daniel Hays

NU Online News Service, May 25, 12:10 p.m. EDT?The St. Paul Travelers Companies, Inc. announced yesterday it had reached a $90 million settlement to end legal actions stemming from its alleged failure to disclose what it knew about asbestos dangers.[@@]

It was the second such settlement related to accusations that the insurer did not take steps to alert the public properly after asbestos claims began piling in against its insured Johns-Manville, a Denver-based manufacturer that produced products containing the substance.

A spokesperson for the company said the previous actions, which settled for $412 million, were brought by claimants in states which have specific laws on the books related to improper claims handling. The latest claims to be settled involved actions brought under states where only general common law principles apply.

Travelers said the settlement, if it receives court approval, would resolve future claims of this sort against Travelers. The company said the previous statute law claims settlement is still pending court approval.

The insurer said it "does not believe that there is any merit to these direct action cases, whether based on statute or common law (as several courts in Texas and Ohio have recently determined)."

But, Travelers said that by entering into the settlements "it has availed itself of an opportunity to resolve not only the pending cases, but also similar future cases if the above settlements are approved by the bankruptcy court in connection with the bankruptcy of former Travelers policy holder Johns-Manville."

The settlement will make a fund of up to $70 million available to claimants plus up to $20 million in legal fees.

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

According to The St. Paul Travelers, the agreement requires all claimants who receive compensation from the fund to provide a general release for all asbestos-related direct action claims they may have against Travelers.

Jay S. Fishman, chief executive officer of the St. Paul, Minn.-based company said he was pleased "with this settlement and the substantial reduction we have achieved in our exposure to asbestos-related claims over the past year."