Berkshire’s appetite for asbestos claim revenue has generated numerous interesting deals, to the least. The latest pair of deals received some public analysis in a July 13, 2017 web site article by insurance coverage lawyers at K & L Gates.  The introduction describes the deals reviewed; see the full article for the conclusions.

“Earlier this year, NICO announced that it had entered into two new retroactive reinsurance transactions –one with various AIG group insurers (the “AIG/NICO Deal”) and the other with the Hartford group insurers (the “Hartford/NICO Deal”). These two recent transactions differ from many of NICO’s prior retroactive reinsurance deals ─in which NICO and its affiliated claims-handling entity, Resolute Management Inc. (“Resolute”), had been given claims-handling responsibility ─ in that the recent transactions do not purport to give control of claims handling to NICO (and Resolute).

Despite representations in the press releases from AIG and Hartford announcing these deals that they (and not NICO) will maintain control of claims handling, a careful reading of the transactional documents for the AIG/NICO Deal and the Hartford/NICO Deal reveals that NICO gained important rights related to claims handling which, if fully exercised, could significantly impact how policyholder claims are handled and resolved (and, ultimately, whether those claims are paid). This Alert discusses how policyholders may be impacted by NICO’s exercise of the claims-handling related rights provided to it under the AIG/NICO Deal and the Hartford/NICO Deal.”

Resolute’s asbestos claims management is in the gunsights of many, for multiple reasons. Resolute just took a notable discovery hit from Amtrak and Anderson Kill. Specifically, a November 23, 2016 opinion reaffirms and extends prior orders requiring broad production of documents and/or privilege logs. The new opinion and order is  Certain Underwriters at Lloyd’s v. Amtrak, No. 16-MC-2778 (FB), 2016 U.S. Dist. LEXIS 162783 (E.D.N.Y. Nov. 23, 2016). The ruling provides the following broad overview of the outcome:

“Currently pending before the Court is Amtrak’s motion to enforce a subpoena duces tecum served upon non-party Resolute Management, Inc. (“RMI”), which directs litigation, manages discovery and conducts the handling of Amtrak’s claims for coverage, including those at issue in the underlying action, on behalf of all the Underwriters at Lloyd’s who are parties to the coverage case and on behalf of a number of additional London insurers and non-London insurers. See Amtrak’s Motion to Compel (Oct. 11, 2016) (“Amtrak Mot.”), DE #1. In the underlying action, the Court previously ruled on, and in substantial part denied, a motion for a protective order filed by the RMI-represented entities concerning the same subpoena served upon RMI. See Minute Entry (Aug. 9, 2016) (“8/9/16 Minute Entry”), DE #423.

For the reasons set forth below, the Court grants Amtrak’s motion to compel, except to the limited extent described herein.”

An August 3, 2015 story in Insurance Insider reports a notable new $150 million second quarter charge taken by CNA for asbestos litigation. The full story is behind a paywall, here.  Last year, CNA took a $479 million charge.

According to the story, “the market” did not see this coming. Perhaps “the market” needs to figure out that asbestos litigation is far from over, and start digging into the details, such as the multi-disciplinary white paper a group of us published last month on asbestos science and law.

Here’s the bottom line part of the CNA and Berkshire story for those in asbestos litigation:

“US-listed carrier CNA saw operating profits halve in the second quarter after a retroactive reinsurance charge relating to its legacy asbestos deal with Berkshire Hathaway impacted the company’s bottom line.

Second quarter operating income totalled $132mn, or $0.49 a share – well below Wall Street analysts’ forecasts of $0.81 a share. The result was also significantly short of the $272mn, or $1.00 a share, of profits generated in the prior-year period.

This came as the ultimate expected loss on the CNA asbestos portfolio reinsured by Berkshire Hathaway in 2010 widened from $2.49bn to $2.64bn. The carrier incurred an additional $150mn of adverse development during the second quarter, which will ultimately be footed by Berkshire Hathaway.

This is $419mn more than the $2.2bn consideration that CNA paid to Berkshire Hathaway in 2010, when it agreed a loss portfolio transfer that saw the conglomerate accept $1.6bn of net liabilities and any deterioration up to an aggregate reinsurance limit of $4.0bn.”