The insurance coverage of US chemical producer Solutia has come under the spotlight as it faces a multi-million dollar lawsuit over the dumping of toxic waste.
Market analysts have cast doubt over ...
The insurance coverage of US chemical producer Solutia has come under the spotlight as it faces a multi-million dollar lawsuit over the dumping of toxic waste.
Market analysts have cast doubt over whether Solutia, which was spun off from Monsanto in 1997, has adequate insurance cover to pay for the potential cost of claims. The company has so far refused to detail its insurance coverage.
The court case is being brought by 3,600 residents of a small town in Alabama.
Solutia is accused of covering up the contamination of the local rivers and land next to its Anniston plant over a 50-year period. It is claimed Solutia knew by the 1960s that PCBs (probable carcinogens) were extraordinarily harmful, but hid the dumping - now banned.
Seven hundred litigants claim past or current personal injury and 2,800 litigants claim damages based on fear of potential future injury.
Shares in the company have plunged recently, as a result of confusion over the exact amount of Solutia's insurance coverage.
"The hard part is, how do you define what the potential liability is?" said William Young, an analyst at Credit Suisse First Boston. "They don't tell you what their insurance coverage is - they have self-insurance and they don't tell you how much they have."
But the company said in a statement: "Solutia reiterates it has reserves, self-insurance and commercial insurance coverage for all its environmental and litigation liabilities. The company notes that commercial insurers provide the majority of its insurance."
Solutia has already paid out $80m (£55m) on earlier settlements related to the case.
PCBs were banned by the federal government in 1979 because of concern about toxicity. But Solutia said there is "no consistent, convincing evidence that PCBs are associated with serious long-term health effects".
