A $1 BILLION (£524m) asbestos-related lawsuit involving Lloyd's of London underwriters and Equitas, the Lloyd's losses run-off vehicle, is due to kick off next week amid concerns that the case could destabilise the whole insurance market.
Five Lloyd's underwriters, Equitas and 20 other insurance groups are fighting American floor-tile company Congoleum, which wants to file for Chapter 11 bankruptcy protection. If it did so, the insurers would have to pay out on its asbestos cover.
The insurance industry is concerned that a victory for Congoleum could prompt other firms troubled by asbestos claims to opt for bankruptcy, forcing yet more big insurance-payouts. They are opposing the Congoleum plan, which will be considered by a New York court.
The case is expected to last until June. Equitas and the Lloyd's insurers have hired the New York office of legal giant Linklaters to fight their corner. Their exposure in the case is understood to run into tens of millions of dollars.
Mary Warren, a partner at Linklaters, said: 'Congoleum asserts that close to $1bn in potential insurance proceeds are at stake, of which the London market underwrote a significant amount.'