Recently taken over Famers in the US forced to pay $455m
Zurich’s wholly-owned subsidiary, Farmers Group (FGI), has settled a Californian class action lawsuit covering management services fees paid by the Farmers Exchanges (Exchanges) to FGI. Zurich will pay $455m.
Zurich and FGI said they do not accept that there is any basis for the plaintiff’s claims but settling was cheaper and less risky than going to court.
“Because the case would have depended in part on events dating from years or even decades ago, the ability to mount a vigorous defence would have been constrained by the passage of time, the turnover of Farmers’ customers and agency force and the challenge of retrieving subscription agreements on policies, many of which expired long ago,” Zurich said.
Changes
Zurich said it was also shaking up FGI to “raise standards of customer communication”.
It said: “The total after tax charges related to this settlement impact the shareholders’ equity by approximately CHF 2.40 per share.” The nine-months results 2010 are due to be released on 4 November 4.
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