A&E LOSSES RISE IN 2001
A special report recently released by A.M. Best Co., “Largest Increase in A&E Losses to Date Seen in 2001,” suggests that the property/casualty industry will ultimately incur more than $121 billion in net asbestos and environmental losses. Asbestos losses are expected to reach $65 billion, while environmental losses are expected to reach $56 billion. So far in 2002 a number of high-profile, asbestos-related actions have been taken by both insurers and U.S. industry. In May, PPG Industries announced a tentative settlement of $2.7 billion, before taxes and discounting, for all current and future asbestos claims related to its 50 percent ownership in the bankrupt Pittsburgh Corning affiliate. More than 30 insurers are expected to fund two-thirds of this settlement, with Travelers Property Casualty Group taking a $240 million share; Hartford Insurance Group taking a $120 million to $150 million share, and Chubb Group of Insurance Cos. taking a $34 million share, all after tax. In July, St. Paul Cos. announced a $1.0 billion settlement in a suit against its USF&G subsidiary that insured Western MacArthur Cos., incurring a
$585 million pretax loss in 2002. Other key findings for 2001 in the report include:
•Of the total $4.4 billion in asbestos and environmental incurred losses, nearly $4.1 billion was related to asbestos exposures alone.
•Overall asbestos and environmental payouts increased 2 percent, reversing a two-year decline.