One Occurrence? Multiple Occurrences?

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From Best

ST. PAUL, Minn. January 23 (BestWire) — The 3rd U.S. Circuit Court of Appeals has reinstated a 2003 asbestos case filed against St. Paul Travelers Cos. over whether each asbestos bodily-injury claim is a separate occurrence or is subject to a single occurrence limit under policies issued by the insurer.

The U.S. District Court for the Eastern District of Pennsylvania dismissed the case in 2004, based on an arbitration decision that sided with Travelers' assertion that such claims are subject to a single occurrence limit. An insulation contracting firm, ACandS, the plaintiff in the case, filed for bankruptcy in 2002.

The Third Circuit has voided that arbitration decision, resurrecting an old case that could affect other pending asbestos suits against the insurer. In response to the ruling, St. Paul Travelers (NYSE:STA) said it still believes its case has merit and intends to litigate vigorously. "The Third Circuit's decision is being analyzed and any impact will be reflected in St. Paul Travelers' previously announced 2005 review of asbestos reserves," the company said.

ACandS, which installed insulation products containing asbestos between 1948 and 1974, is seeking to establish a trust to pay asbestos bodily-injury claims against it and assign the trust its rights under insurance policies issued by Travelers Property Casualty. According to St. Paul Travelers, ACandS stated in bankruptcy documents it has settled the vast majority of asbestos-related bodily-injury claims currently pending against it for about $2.8 billion and that the insurer is liable for 45% of that amount. St. Paul Travelers denies that assertion.

In recent years, St. Paul Travelers' reserves have been volatile because of asbestos and environmental-related charges. In a recent filing with the U.S. Securities and Exchange Commission, the insurer disclosed that its net asbestos reserves totaled $3.67 billion as of Sept. 30, 2005, compared with $3.11 billion at Sept. 30, 2004.

The property/casualty insurer said it intends to review its fourth-quarter and full-year 2005 financial performance, including a discussion of the company's annual review of asbestos reserves Feb. 2, following the release of its earnings earlier that morning.

Most members of St. Paul Travelers Cos. have Best Financial Strength Rating of A+ (Superior) or A (Excellent).