Canadian Underwriter

Asbestos fund unlikely to boost ratings: Moody’s

April 29, 2003   by Canadian Underwriter

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Despite movement towards legislative reform on asbestos litigation in the U.S., rating agency Moody’s says this will not likely help boost insurer ratings.
Currently, the Senate is looking at an asbestos “fund”, reported to be some US$90 billion, that would be used to settle claims. The fund would largely be paid for by insurers and defendants.
In response, Moody’s notes that such a solution will only bring a positive impact for insurers if the ultimate cost of exposure is clear.
“Furthermore, this overall impact, which could be positive or negative, would then be considered in the overall context of the insurer’s credit profile. Moody’s considers it unlikely, however, that such a settlement would precipitate many rating actions in either direction.”
Several insurers have seen their ratings go southward after taking on substantial reserve charges in the fourth quarter of 2002 and early 2003 to cover potential future asbestos claims.

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