Lloyd's reconstruction and renewal vehicle Equitas has dismissed fears that it may be hit for some of the record £96bn damages awarded against cigarette companies in the United States. This follows a Lloyd's spokesman's claim that Equitas may have to meet the claim.
The shock award by a Florida jury on Friday followed a two-year trial involving liabilities for tobacco-related illnesses, such as heart disease and lung cancer suffered by 500,000 Americans.
The jury decided that cigarette makers – including Philip Morris and Brown & Williamson, a subsidiary of British American Tobacco – should pay massive punitive damages of £96bn.
The case is certain to be appealed.
James Burcke, spokesman for Equitas, which is responsible for Lloyd's £10bn pre-1992 liabilities, said its exposure for potential tobacco-related claims was minimal to nil: “We do not believe tobacco injury claims will create a significant liability for Equitas.”
Burcke thought it unlikely that insurers generally would be asked to pay-out for the case. He said it was against public policy in many US states for insurers to cover punitive damages awards.
More than half of the 500 long-tail risks Equitas has in run-off are related to asbestos, pollution and other health hazards.
Equitas is set to unveil its 1999 results tomorrow (Friday). For 1998, it recorded a net-tax surplus of £772m, after paying gross paid claims of £2.25bn.