Equitas sets aside extra £399m to deal with asbestos claims

Click to follow
The Independent Online

Equitas, the vehicle set up to reinsure Lloyd's of London investors, has set aside an extra £399m to settle claims from people suffering from asbestos-related illnesses.

A review of potential defendants identified policies that were not previously recognised as potential targets of asbestos claims, Equitas said.

Hugh Stevenson, Equitas' chairman, said: "When I wrote to reinsured 'Names' last December I stated that it was possible we would have to strengthen our asbestos reserves at the end of the year.

"I also referred to the falls in the UK and US equity markets and to the impact of exchange losses on the portion of our surplus held in US dollars. These three factors have combined to produce the decrease in both our accumulated surplus and our solvency margin."

He added that "asbestos remains the greatest single threat to Equitas".

Equitas said in April it would pay Honeywell International $472m (£283m) to settle asbestos claims at former divisions of the world's biggest maker of climate control systems.

The update on Equitas' asbestos reserves came as it reported weaker results for the year to March. Its accumulated surplus after tax fell to £527m, compared with £679m the previous year. Its solvency margin - the accumulated surplus as a percentage of net claims outstanding - also fell, from 10.3 per cent to 8.7 per cent.

Mr Stevenson said: "The balance sheet of Equitas is weaker than it was a year ago, and we still face significant uncertainties arising from matters over which we have little or no control."

Equitas says it moved earlier than rivals, increasing its asbestos reserves by £3.2bn three years ago. Others insurance groups face similar woes. Royal & SunAlliance reported a fourth-quarter loss of £245m last year and said it has asbestos reserves of £800m.