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ASBESTOS LITIGATION: Hanover Has $10.3MM Net Reserves at Dec. 31
The Hanover Insurance Group, Inc.'s asbestos reserves, net of insurance and excluding pools, was US$10.3 million for the year ended Dec. 31, 2008, compared with US$11.3 million for the year ended Dec. 31, 2007.
Ending loss and loss adjustment expense reserves for all direct business written by the Company's property and casualty companies related to asbestos, environmental damage and toxic tort liability, included in the reserve for losses and LAE, were US$18.5 million in 2008, US$19.4 million in 2007 and US$24.7 million in 2006, net of reinsurance of US$13.9 million in 2008, US$11.1 million in 2007 and US$13.8 million in 2006.
The Company's A&E-related gross reserves for loss and LAE expenses were US$20 million at Sept. 30, 2008. The Company's A&E net reserves for loss and LAE were US$13.4 million at Sept. 30, 2008. (Class Action Reporter, Nov. 28, 2008)
A&E reserves decreased by US$900,000, during 2008, primarily due to a favorable cash recovery from a reinsurer on a prior year environmental claim. During 2007, the Company reduced its A&E reserves by US$4.5 million.
In addition, the Company has established loss and LAE reserves for assumed reinsurance pool business with asbestos, environmental damage and toxic tort liability of US$58.4 million in 2008, US$56.9 million in 2007 and US$57 million in 2006.
These reserves relate to pools in which the Company has terminated its participation. However, it continues to be subject to claims related to years in which it was a participant.
A significant part of the Company's pool reserves relates to its participation in the Excess and Casualty Reinsurance Association (ECRA) voluntary pool from 1950 to 1982. In 1982, the pool was dissolved and since that time, the business has been in runoff. The Company's percentage of the total pool liabilities varied from one percent to six percent during these years.
The Company's participation in this pool has resulted in average paid losses of about US$2 million annually over the past 10 years.
Headquartered in Worcester, Mass., The Hanover Insurance Group, Inc.'s primary business operations include insurance products and services in three property and casualty operating segments. These segments are Personal Lines, Commercial Lines, and Other Property and Casualty.
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