The Hartford announced last week that it had reached an agreement with Equitas and all Lloyd's syndicates reinsured by the run-off entity to resolve all reinsurance payment disputes, although the terms of the deal were not disclosed.
The Hartford said it will take a $243 million pretax charge in the second quarter after a comprehensive review of all recoverables, including those from Equitas.
"The agreement is a significant step in our efforts to remove volatility from our ceded and assumed reinsurance portfolio," said Neal Wolin, general counsel for The Hartford.
The deal also resolves several years of litigation with Equitas and the carrier's single largest reinsurance recoverable.
The blanket casualty treaty, which was the focus of the litigation, is a multilayered reinsurance program that provided for excess-of-loss coverage for The Hartford in various amounts from the 1930s through the 1980s.
The upper layers of the treaty were first put in place in 1950--primarily with London market insurers, including Lloyd's syndicates. The treaty litigation continues with other upper-layer reinsurers under the treaty, the company noted.
The Hartford also said its annual ground-up review of asbestos exposure will not result in any reserve additions this year.
Equitas--the London-based company set up to reinsure and run-off pre-1992 Lloyd's non-life liabilities--earlier this month announced that it had hiked gross discounted asbestos reserves by $162 million to $2.8 billion as of March 31.
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