Travelers Takes $1.3B Charge for AsbestosJan 14, 2003 | AP Travelers Property Casualty Corp. said Tuesday it would charge $1.3 billion against earnings after taxes in the fourth quarter to strengthen its reserves for asbestos claims.
For the fourth quarter, Travelers expects a net loss of $793 million, or 79 cents per share with the charge. It expects a net loss including the charge of about $27 million, or 3 cents per share, for all of 2002.
Travelers plans to release fourth quarter results on Jan. 23.
The insurer expects profits for 2003 of $1.69 to $1.79 per share.
Travelers said it increased its reserves for asbestos claims to $3.4 billion, up from $950 million, after finishing a study of its asbestos reserves and exposure to losses. The reserve includes a provision for all settlements, both final and proposed, including a proposed settlement with PPG Industries.
``This reserve strengthening reflects a conservative view of trends that have become clearer over the last few quarters and our estimate of the projected ultimate cost of our asbestos liabilities,'' said Robert I. Lipp, Chairman and Chief Executive Officer. ``The study was extremely comprehensive and included a review of past settlements, all active policyholders, litigation, and potential non-product exposures. The study also considered the potential for new claims from unidentified policyholders, as well as exposures to insurance industry pools.''
The study found that the vast majority of the company's exposure to asbestos losses are related to long-known policyholders.
Travelers provides homeowners and car insurance as well as commercial and other insurance products.
In morning trading on the New York Stock Exchange, Travelers A shares were up 78 cents at $16.62 while its B shares were up 81 cents at $16.69.