8-KOther Events

HARTFORD INSURANCE GROUP, INC. 8-K Report (Oct 29, 2002)

Filed October 29, 2002For Securities:HIGHIG-PG

Summary

This 8-K filing from The Hartford Financial Services Group, Inc. (HIG) on October 29, 2002, discloses a significant legal action filed against its subsidiary, Hartford Accident and Indemnity Company (Hartford A&I). A former distributor of asbestos products, Mac Arthur Company, and five asbestos claimants have sued Hartford A&I seeking coverage and damages for asbestos bodily-injury claims, totaling approximately $1.8 billion in unpaid judgments against Mac Arthur to date. Mac Arthur is seeking additional coverage under policies issued between 1967-76, arguing that Hartford A&I has only exhausted its 'products aggregate limit' and not separate limits for 'non-products liability.' The potential ultimate liability for The Hartford is currently unknown and could be substantial. While the company intends to vigorously defend itself, management acknowledges that an adverse outcome could have a material adverse effect on its results of operations, financial condition, and liquidity. The resolution of this matter is expected to take several years.

Key Highlights

  • 1Hartford A&I is facing a lawsuit from Mac Arthur Company and asbestos claimants seeking coverage for approximately $1.8 billion in asbestos bodily-injury judgments.
  • 2The lawsuit alleges that Hartford A&I owes additional coverage beyond limits previously paid, based on a distinction between 'products' and 'non-products' liability.
  • 3Hartford A&I previously paid its full aggregate limits plus defense costs under primary general liability policies issued to Mac Arthur between 1967-76.
  • 4Mac Arthur is pursuing this action in conjunction with an anticipated bankruptcy proceeding where they intend to estimate total liability.
  • 5The company intends to defend the action vigorously, but management acknowledges significant uncertainty regarding the outcome.
  • 6An adverse outcome in this litigation could have a material adverse effect on The Hartford's financial results, condition, and liquidity.
  • 7Resolution of this matter is not expected for at least a year, and likely several years.

Frequently Asked Questions

The primary issue is a lawsuit filed against The Hartford's subsidiary, Hartford Accident and Indemnity Company, by Mac Arthur Company and asbestos claimants. They are seeking substantial coverage for asbestos bodily-injury claims and judgments against Mac Arthur.

The immediate claim is for approximately $1.8 billion in unpaid judgments against Mac Arthur. However, the ultimate amount of Mac Arthur's alleged non-products asbestos liability, including future claims, is unknown. Management has stated that an adverse outcome could have a material adverse effect on the Company's results of operations, financial condition, and liquidity.

The Hartford intends to defend the action vigorously. Management believes the liability, if any, will not be resolved for at least a year and most probably for several years due to various legal uncertainties, including the venue, the success of defenses, and the scope of policy coverage.

The filing notes that St. Paul Companies reached a $975 million settlement with Mac Arthur to resolve asbestos liability, related to USF&G's coverage which was denied for many years. In contrast, Hartford A&I had paid out its aggregate limits and defense costs between 1978 and 1987 before Mac Arthur ceased submitting claims under those specific policies.