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Allianz raises US asbestos provisions by £480m

Rachel Stevenson
Saturday 14 September 2002 00:00 BST
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Allianz, Europe's biggest insurer, revealed yesterday that it has had to increase provisions for asbestos-related claims in its US subsidiary by $750m (£482m).

The additional funds are being put in the Californian-based Fireman's Fund Insurance Company, taking Allianz's provisions for asbestos up to $1.5bn. The amount is slightly less than most analysts had forecast and gives Allianz a "survival ratio" – the length of time over which it can comfortably afford to keep paying claims – of 13 years. "I can't make a statement that that is going to be it, but under all human assumptions we should have provisions to cover the risk," a spokesman for Allianz said.

The news is a further setback for Allianz, which announced poor results at Dresdner Bank and substantial exposure to the recent flooding in central Europe.

Several competitors have been lining up to raise capital to bolster their draining reserves, but analysts think it unlikely Allianz has been weakened enough to warrant a rights issue. The shares fell 7.7 per cent to 6405p.

Insurers are finding it difficult to quantify the provisions needed to cover asbestos-related claims. Individuals not yet suffering from any disease are able to start class action in the US, which is exacerbating the problem. "This isn't going to disappear. There is no simple way around it, other than to keep increasing reserves," Charles Graham, an analyst at Williams de Broe, said.

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