Travelers Suffers Loss After Asbestos ChargeJan 23, 2003 | FT.COM
Travelers Property Casualty on Thursday reported a significant loss for the fourth-quarter as it booked a $1.3bn charge for bolstering its asbestos reserves.
The insurer reported a loss of $793m, or 79 cents per share, against a profit of $303m, or 39 cents per share, in the same period last year.
This month, Travelers said it was increasing its asbestos reserve to $3.4bn. The addition of $2.5bn for potential liabilities pushed the former Citigroup insurance subsidiary into the red for last year.
The additions were more than those made by all insurers for asbestos costs, showing how rapidly anticipated liabilities have soared in recent months.
Travelers officials have called for government action in response, citing studies showing that more than 50 per cent of compensation covers "transaction costs" - mostly involving fees for lawyers.
As recently as two years ago, insurers thought they had set aside sufficient reserves to cover asbestos costs. However, that was before class-action attorneys began identifying new targets to sue for damages.
Litigation, which had previously been related directly to miners and asbestos manufacturers, has moved on to distributors of the product, asbestos installers or any company that may have had some interaction with the substance.