Berkshire Unit Ordered to Pay Millions for Asbestos-Related Settlement -- Update

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 [e-mail]

(END) Dow Jones Newswires

March 07, 2018 17:27 ET (22:27 GMT)

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