W.R. Grace, CNA insurers' $84 million coverage settlement approved

By Caroline Salls

Pittsburgh, Jan. 24 - W.R. Grace & Co. received court approval of an $84 million settlement with insurers Continental Casualty Co. and Continental Insurance Co., according to a Saturday filing with the U.S. Bankruptcy Court for the District of Delaware.

The insurers agreed to the settlement on their own behalf and on behalf of the "CNA companies," as well as in Continental Insurance's capacity as successor to CNA companies Pacific Insurance Co. and Boston Old Colony Insurance Co. and as successor-in-interest to alleged policies issued by Harbor Insurance Co., Buffalo Insurance Co., Buffalo Reinsurance Co. and London Guarantee & Accident Co. of New York.

According to the motion, the CNA companies issued insurance policies that provide coverage for asbestos-related claims, including three primary liability policies and 16 high-level excess policies.

Grace said the excess policies provide a total of $158 million of limits for products/completed operations, and all 16 attach at or above $75 million of excess primary coverage.

In addition, the company said $123 million of the $158 million of coverage provided by the excess policies attaches at or above the $150 million level.

W.R. Grace said it has been in coverage litigation with the CNA companies for years and has previously entered into five separate settlements.

However, the company said coverage disputes remain, and the insurers and their affiliates have filed numerous proofs of claim against W.R. Grace and have objected to its plan of reorganization.

This latest settlement resolves the remaining disputes regarding the policies in question, the motion said.

Under the settlement, the CNA companies will withdraw their objections to the company's plan and pay $84 million to Grace's asbestos personal injury trust in seven annual installments. The policies will be sold to the CNA companies upon receipt of the first payment.

In addition, the asbestos trust will try to enforce the application of the trust channeling injunction against any asbestos-related bodily injury claims that may be made against the CNA companies by third parties, up to a limit of $1 million of litigation costs.

If any of the claims cannot be enjoined or if they are resolved under specified circumstances, the trust will indemnify the CNA companies for any settlements or judgments related to the bodily injury claims, up to a maximum of $13 million.

W.R. Grace, a Columbia, Md.-based specialty chemicals company, filed for bankruptcy on April 2, 2001. Its Chapter 11 case number is 01-01139.

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