Lloyd’s runoff vehicle Equitas and Travelers Property Casualty have reached a comprehensive settlement of policies existing between Travelers and the Lloyd’s underwriters who are reinsured by Equitas.
Equitas was established in1996 to handle the run-off of asbestos and environmental claims, which nearly bankrupted Lloyd’s in the early ’90’s. Under the terms of the agreement, Travelers will receive $245 million, resolving net claim balances of approximately $255 million from Equitas.
The insurer noted that “If Federal asbestos reform legislation is enacted into law by the 108th U.S. Congress, Equitas may elect to recoup approximately $150 million from Travelers and, if Equitas makes that election, the reinsurance agreements for asbestos coverage and certain claim disputes related thereto, will be reinstated. The settlement covers current and future reinsurance claims against certain Lloyd’s underwriters arising from policies issued prior to 1993 by Travelers and the former Aetna companies acquired by Travelers in 1996. ”
Equitas Claims Director Glenn Brace called the settlement “encouraging.” He noted that Equitas had also reached a claims settlement agreement with Halliburton last January which resolved the runoff vehicle’s largest direct exposure to asbestos claims. The settlement with Travelers resolves its largest reinsurance claim.
“This transaction brings to closure, on fair and equitable terms, the reinsurance agreements between Travelers and the Lloyd’s market prior to 1993,” stated Scott Belden, Travelers’ Managing Director, Risk and Reinsurance.
“The settlement also resolves current and future reinsurance claims against Travelers by the Underwriters at Lloyd’s of London reinsured by Equitas related to pre-1993 policies,” said the insurer’s announcement. “Reinsurance claims by Travelers against other London market reinsurers are not affected by this settlement. The transaction is not expected to impact Travelers earnings.”
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