Asbestos Insurance Coverage – Appellate Decision in NY May Cause a look into the Equitas Ploy
A new chapter may be opening in the long-running saga of London Market insurance coverage for asbestos claims. The story to date, in short, is that many London Market names and companies were in fact insolvent in the 1980s and 1990s as a result of then-current and then-foreseeable asbestos claim payment obligations. However, most refused to admit the future claims impact of past insurance promises. Instead, they embarked on financial engineering on a grand scale, creating an enity known as Equitas to ostensibly "reinsure" and thus pay future claims.
After its creation, Equitas t took steps to consolidate and limit the financial pain. Among other steps, it went around the world pleading poverty, complaining about the US tort system (sometimes rightfully), and threating to go into insolvency unless policyholders accepted relative pennies instead of full insurance dollars. Many, many corporate insureds gave up and took the pennies.
Later, Equitas started more financial engineering. That round culminated in a deal with Warren Buffet insurance entities to take over much of the risk of Equitas. Now the Buffet companies use much of the Equitas playbook, and refuse to pay many claims.
Now, a New York appellate court has ruled the Equitas situation can be examined in an antitrust claim. The opinion is here. A summary article is here. Many think it be wonderful to see this case expose more of the details of the financial engineering scam known as Equitas. But one has to wonder if the London Market players will let that happen.
0 views0 comments