Equitas to Pay $33 Million to Settle Asbestos Claims

Equitas, the runoff company handling pre-1993 liabilities of Lloyd's, has agreed to pay manufacturer Crane Co. $33 million to settle insurance claims for asbestos and other liabilities. The settlement, which includes $1.5 million to be paid to Crane in the third quarter of this year, will also place the balance in an escrow account for the payment of future asbestos claims. If no federal asbestos legislation is enacted by January 3, 2007, the funds remaining in the escrow will be paid to Crane. The agreement is significant as it highlights the uncertainty surrounding Equitas' liabilities, which could be mitigated by a legislative change. A federal asbestos bill stalled in the U.S. Senate could offer protection to asbestos insurers and reinsurers against liabilities that are now open-ended.

Key Takeaways:

Equitas will pay $33 million to settle insurance claims for asbestos and other liabilities with Crane Co.
The settlement includes $1.5 million to be paid to Crane in the third quarter of this year and the balance to be placed in an escrow account for future asbestos claims.
Funds remaining in the escrow will be paid to Crane on January 3, 2007, unless federal asbestos legislation is enacted.
The agreement highlights the uncertainty surrounding Equitas' liabilities and the potential impact of a legislative change.
A federal asbestos bill stalled in the U.S. Senate could provide protection to asbestos insurers and reinsurers against open-ended liabilities.
The bill, if passed, would set up a $140 billion trust fund to provide relief to insurers and underwriters.

Statistics:

$33 million: The amount Equitas will pay to settle insurance claims with Crane Co.
$1.5 million: The amount to be paid to Crane in the third quarter of this year.
2007: The year Equitas will pay the balance of the settlement to Crane if no federal asbestos legislation is enacted.
$140 billion: The amount of the trust fund proposed in the federal asbestos bill.
2005: The year in which Equitas and Crane Co. agreed to settle the claims.

Sources:

A.M. Best Company, Inc. (BestWire, July 27, 2005)
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