St Paul agrees US$1bn settlement

In one of the largest asbestos settlements agreed by an insurer, St Paul Cos has reached agreement to settle all litigation on coverage for buildings products firm Western MacArthur, insured by St Paul unit USF&G between 1948 and 1960. The larger than expected US$1bn settlement will cost St Paul around US$380mn after reinsurance and tax recoveries. The settlement is based on creation of a trust and is split between US$235mn scheduled for payment in the second quarter before that event and US$740mn on Western MacArthur’s bankruptcy reorganisation of January 2003, whichever is the earlier. A further US$12.5mn will be paid to cover legal costs.