Ace to boost reserves, sell A&E runoff.Seeking to finally kill off the asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. reserving issue that has dogged it for the past eight years, Bermuda-based insurer Ace Ltd. said it would boost reserves at its asbestos and environmental runoff Runoff The procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Notes: If the "tape is late" then it can take a long time to print off all the closing prices. units and sell those units to a London-based holding company. Evan Greenberg, Ace's president and chief executive officer, said the company would take an after-tax charge of $298 million, or $1.05 a share, against fourth-quarter earnings to strengthen its asbestos, environmental and other runoff reserves. That charge includes $279 million related to Ace's Brandywine unit and $19 million in relation to Ace's Westchester Specialty unit. The Brandywine reserve increase is $788 million gross and $339 million net of reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. and before tax. For Westchester, the increase is $200 million gross and $25 million net of reinsurance and before tax. Most of the Westchester gross losses are covered by a reinsurance agreement with Berkshire Hathaway Berkshire Hathaway (NYSE: BRKA, NYSE: BRKB) is a conglomerate holding company headquartered in Omaha, Nebraska, U.S., that oversees and manages a number of subsidiary companies. Inc.'s National Indemnity Co. The fourth-quarter charge includes a bad-debt provision of $95 million and a tax benefit of $161 million. The Brandywine runoff business consists mainly of the legacy exposures of Century Indemnity Co. and its subsidiaries, which Ace acquired when it purchased Cigna Property & Casualty in 1999. Greenberg said Ace can't yet reflect the limited nature of those liabilities in its financial reports under U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . |
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