Transatlantic Reinsurance Co., a subsidiary of Alleghany Corp., will pay $400m to close down reinsurance deals with American International Group and Warren Buffett’s
Berkshire Hathaway for decades old policies that covered asbestos-related illness and environmental liabilities.
According to an Alleghany regulatory filing submitted Tuesday, the company will post a $20m charge in the fourth quarter as a result of the agreement.
Based on a preliminary analysis of its asbestos related illness and environmental impairment (“A&E”) loss and loss adjustment expense reserves, Transatlantic estimates that the settlement payment will eliminate around 90% of its liabilities for A&E losses occurring in 1986 and prior years.
Alleghany reached a deal in 2011 to buy Transatlantic from
AIG, and a year later
AIG agreed to pay Transatlantic at least $45 million to settle disputes tied to securities-lending losses that occurred when the companies were together.
AIG is seeking to limit asbestos-related liabilities as costs from the policies rise, while Berkshire has been taking on the risks, adopting a significant amount from AIG.
