Equitas has confirmed that asbestos claims continue to be the biggest single threat to its stability but has decided not to increase its provisions against future asbestos claims.
The group, which was set up to reinsure and run off the1992 and prior years' non-life liabilities of Lloyd's syndicates, made the statement in releasing its results for the year to 31 March 2002.
Equitas reported a £21m, or 3% fall in its accumulated surplus to £679m from £700m in the year to 31 March 2001. However, its solvency margin, the company's accumulated surplus stated as a percentage of net claims outstanding, rose almost one percentage point to 10.3% from 9.5%.
Group chairman Hugh Stevenson said in the two years to 31 March 2001, Equitas had increased gross undiscounted asbestos reserves by a total of £3.2bn.
"However, on the basis of the group' s experience during the past year, which included both positive and negative developments, we have concluded that it is not necessary to make any further overall increase in the gross discounted provisions for future asbestos claims payments," he said.
The group's chief executive officer, Michael Crall, added that there had been many asbestos related developments during the year, including a continuing stream of asbestos bankruptcies, a large number of high profile court awards and no relief from the pace of new claims filings.
"Nonetheless, these developments, after taking into account the expected impact of our own claims management strategies and a more favourable assessment of inwards reinsurance estimates, led us to conclude that it was not necessary to adjust the level of discounted asbestos reserves at the year end," he said.
