Hanson cuts costs of US asbestos claims

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The Independent Online

Hanson, the building materials group, said it had substantially reduced the costs of its US asbestos-related damage claims yesterday, securing a settlement with its insurers which will reduce its annual bill by 20 per cent to $48m (£28m).

Analysts speculated that the move, which helps eliminate a large element of risk associated with the company, may help ignite corporate interest in the group, with Cemex, the Mexican owner of RMC, seen as a possible suitor.

Hanson faces claims from more than 130,000 former employees in the US, who claim to have suffered illness as a result of exposure to asbestos in the workplace. Although the US government has been working on plans to develop a $140bn fund to compensate victims of asbestos diseases, which would help companies gain greater security over their liabilities, it remains uncertain whether this will come to fruition.

In a note published yesterday, David Taylor, an analyst at Teather & Greenwood, said: "Hanson's 'elephant in the room' is its US asbestos liabilities. After today they are smaller, and possible resolution is less dependent on a US federal reform bill that remains in the legislative long grass."

Hanson's settlement, which is effective from 1 January this year, relates to just one of its US subsidiaries, which accounts for 20 per cent of its asbestos-related claims. As part of the deal, the group has agreed to pay the first $35m of its future asbestos-related claims, after which its insurers will pay all the claims up to an undisclosed limit.

In total, the settlement will reduce Hanson's asbestos-related costs by about $12m a year to $48m. However, it said several of its other US subsidiaries are continuing to fight against its insurers over asbestos liabilities.

Asbestos-related illnesses in the UK are expected to cost up to £20bn over the next 30 years, with numerous companies still struggling under a mountain of claims, or in disputes with their insurers.

Although the two most dangerous types of asbestos have been banned in the UK and US since the late 1980s, many asbestos-related illnesses take years to emerge. Mesothelioma, the most serious, can take up to 50 years to manifest itself and will then kill its victims within two years. The average claim for damages for a mesothelioma victim is £100,000.

Hanson shares closed up 5p at 691p after yesterday's news, giving the company a market value of £4.97bn.

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