NU Online News Service, May 13, 4:00 p.m. EDT–Congoleum Corporation said it has reached a $103 million settlement with American International Group over asbestos-related claims.
The Mercerville, N.J.-based maker of flooring products said that under the terms of the settlement, certain companies within AIG providing excess insurance coverage, would pay the $103 million over 10 years to a trust to be formed upon confirmation of Congoleum's proposed settlement plan that is waiting approval by the bankruptcy court.
Congoleum said the settlement with AIG resolves coverage obligations of policies with a total of $114 million in liability limits for asbestos bodily injury claims.
"We are pleased to have resolved our dispute with this carrier, and we are hopeful that additional negotiations presently under way will lead to further settlements with other carriers in the near future," Roger S. Marcus, chairman of the board, said in a statement.
He added that Congoleum is now in a position to pursue other insurer claims and permit the company to begin payment to claimants if its bankruptcy reorganization plan is approved.
"We believe this represents another major step forward in our journey to put our asbestos exposure behind us," said Mr. Marcus.
A spokesman for AIG confirmed the Congoleum settlement but could not immediately say if this completed all of AIG's obligations with Congoleum. He had no additional comments on the settlement.
Congoleum, a subsidiary of American Biltrite, Inc., filed for Chapter 11 bankruptcy protection in December of 2003 as it sought to resolve asbestos claims against it. The company has entered into a settlement agreement with the plaintiffs that is awaiting bankruptcy court approval.
According to the company's 10-K filing for 2004, it has in excess of $491 million in asbestos liability pursuant to the settlement agreements. The company said it expects the bulk of the liability to be paid by insurers.
Congoleum said it had purchased $1 billion coverage for general and product liability claims during the period it produced products containing asbestos. However, some insurers have objected to the settlement, using a prepackaged funding format, and are disputing the claims.
Request for additional comment from Congoleum was not returned.
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