Berkshire Unit Ordered to Pay Millions for Asbestos-Related Settlement -- Update
March 07 2018 - 4:42PM
Dow Jones News
By Nicole Friedman
Berkshire Hathaway Inc.'s National Indemnity Co. has to pay more
than $68 million of Montana's asbestos-related settlement costs, a
state judge has ruled.
Montana reached a $43 million settlement in 2009 and a $25
million settlement last year with people injured by asbestos at a
vermiculite mining operation in Libby, Mont. The victims claimed
the state had knowledge of unsafe conditions at the mine for
decades and failed to protect workers.
National Indemnity provided general liability insurance to the
state between 1973 and 1975. It argued those insurance policies
didn't cover the asbestos-related claims.
Judge Holly Brown said in a state district court ruling on March
1 that National Indemnity breached its duty to defend the state
from lawsuits related to the Libby mine.
Berkshire, a conglomerate run by billionaire Warren Buffett, has
taken on growing responsibility for asbestos-related insurance
claims in recent years. Insurers including Liberty Mutual and
American International Group Inc. have paid Berkshire billions of
dollars to take responsibility for future asbestos claims tied to
past policies, in an arrangement known as retroactive
reinsurance.
Berkshire benefits from these deals and a host of other
insurance businesses because they add to the company's "float,"
premium money that it holds to pay claims in the future and can
invest and profit from in the meantime. Berkshire's growth has been
built upon the use of insurance float, starting with Mr. Buffett's
acquisition of National Indemnity in 1967.
In the Montana case, the judge ruled that National Indemnity is
responsible for the $43 million settlement and any new settlements
that have been approved since then, as well as the state's defense
costs since 2005. National Indemnity already has paid $16.1 million
toward the 2009 settlement.
More than 860 additional claimants who weren't included in the
settlement had sued the state as of September 2015, according to
the ruling. A spokeswoman for the state declined to say what the
full cost to National Indemnity could be.
A spokeswoman for the state said National Indemnity would be
responsible for the $25 million settlement reached last year but
declined to say what the full cost to the insurer could be.
"We are pleased with the recent decision," she said. "It's a
step in the right direction, but there are still some more steps to
come, and we're looking forward to what's next."
National Indemnity declined to comment.
Either party can appeal the decision to the Montana Supreme
Court.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
March 07, 2018 17:27 ET (22:27 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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