Equitas attacks US asbestos law
By Andrew Cave, Associate City Editor (Filed: 24/01/2005)
Equitas, the reinsurance vehicle set up to rescue Lloyd's of London from towering asbestos liabilities, yesterday blasted a proposed US law that would fail to protect the organisation from going bankrupt. | |  | | Scott Moser: US plan is 'naked commercialism' |
The Fairness in Asbestos Injury Resolution Act, a bill being laid before the US Senate this week by Senator Arlen Specter, would require US businesses and all insurers with asbestos liabilities to contribute to a $140billion (£75billion) trust that would take over from America's courts in dealing with all US asbestos claims. Insurers would be asked for about $46billion over 27 years, with individual companies' amounts decided by a new commission, based on their liabilities. All insurers and reinsurers except Equitas would be given the right to either reduce or defer the payment if they could demonstrate it is unfair or would force them into bankruptcy. Equitas is excluded because the bill's backers argue that it can go back to the Names whose liabilities it reinsures to claim back any shortfall. However, Equitas chief executive Scott Moser said: "What we object to is the idea that this should be done for literally every other insurance company in the world except Equitas. US insurers and reinsurers, quite frankly, would prefer money to come from London than to come from them, and they have more votes than Londoners. "It is not as grandiose as nationalistic. It is naked commercialism. If you pay instead of me, I get a competitive advantage over you. If the London market is disrupted, that is in the interests of US insurers and reinsurers who are competing with it." Mr Moser added: "We believe that our reserves for asbestos are adequate and that if there is a fair, open, transparent proceeding, a commission will not ask us to pay any more than what we have reserved. It might even ask us to pay less. "We are just saying if you are going to ask us to give up all our rights like everybody else and you are going to realise that you should protect people in case this goes a bit awry, then you should protect us like everyone else." Christopher Stockwell, chairman of the Lloyd's Names Association, said: "The proposed bill could crystallise demands on Names far sooner than anyone envisaged. The consequence could be very serious for thousands of Names who could face new demands for cash. These proposals need to be strenuously resisted by Equitas on behalf of all Names." Equitas assumed all Lloyd's pre-1993 liabilities. It has paid out £15billion since 1996 and settled five of the top 10 claims it had four years ago. Its most recent estimate of its asbestos liabilities puts them at £4billion but it has only put £2.8billion aside to meet them because it expects investment returns to make up the difference. For publishers wishing to reproduce
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