Higher-than-expected levels of asbestos claims have once again raised question marks about Lloyd's run-off vehicle Equitas' ability to survive.
The concerns arose as the company's chairman Hugh Stevenson admitted Equitas has been forced to “significantly increase” its claims reserves because of the number of cases that have been filed in the past year.
“We have little or no control over many important factors which could have a profound effect on our fortunes, including leading developments, judicial decisions, social trends or the emergence of new health hazards,” he said.
Stevenson said these issues, combined with a jump in the number of claims filed have forced Equitas to make an increase in reserves.
Stevenson refused to say how much of an increase in asbestos reserves Equitas has made, but the group's annual report shows that it has strengthened reserves by a total of £711m taking the total up to £9bn.
With this provision balanced by the release of provisions for other classes of business – notably tobacco – the amount set aside for asbestos claims is likely to be higher than £711m.
Chief executive Michael Crall said the increase in filed claims has prompted Equitas to launch a complete review of asbestos claims.
“In this process, we are taking nothing for granted. We are examining every aspect of asbestos claims with a fresh mind,” he said.
A spokesman for the Lloyd's run-off vehicle said: “The problem with Equitas is that it has been given a limited amount of money to pay claims and if there are more claims than anyone thought possible, then there is not going to be the money to pay them.”
