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March 13, 2009 |
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ASBESTOS LITIGATION: American Financial Facing Liability Actions American Financial Group, Inc.'s insurance company subsidiaries and its 100 percent-owned subsidiary, American Premier Underwriters are parties to litigation and receive claims alleging injuries and damages from asbestos, environmental and other substances and workplace hazards. Great American Insurance Company and certain other insurers were parties to coverage litigation (arising from claims alleging asbestos exposure resulted in bodily injury) under insurance policies issued during the 1970s and 1980s to Bigelow-Liptak Corporation and related companies, subsequently known as A.P. Green Industries, Inc. A.P. Green sought to recover defense and indemnity expenses related to those claims from a number of insurers, including Great American. In February 2002, A.P. Green filed petitions for bankruptcy under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Western District of Pennsylvania (In Re Global Industrial Technologies, Inc., et al, filed Feb. 14, 2002). In 2003, Great American Insurance Company entered into an agreement, which was approved by the Bankruptcy Court, for the settlement of coverage litigation related to A.P. Green asbestos claims. The settlement of US$123.5 million (Great American has the option to pay in cash or over time with 5.25 percent interest) has been fully accrued and allows up to 10 percent of the settlement to be paid in AFG Common Stock. The settlement agreement is conditioned upon confirmation of a plan of reorganization that includes an injunction prohibiting the assertion against Great American of any present or future asbestos personal injury claims under policies issued to A.P. Green and related companies. During 2007, the Bankruptcy Court confirmed the A. P. Green Plan of Reorganization, which includes the injunction required by Great American's settlement agreement. Certain parties appealed the confirmation on issues that management believes are ancillary to the Great American settlement. Headquartered in Cincinnati, Ohio, American Financial Group, Inc. engages in property and casualty insurance, focusing on specialized commercial products for businesses, and in the sale of traditional fixed, indexed and variable annuities and a variety of supplemental insurance products. |
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