Everest Reinsurance Co & Mt. McKinley Insurance Co.

Southfield, MI: (Jun-20-07) Federal-Mogul Corp. filed a lawsuit against two of its insurers, Everest Reinsurance Co. and Mt. McKinley Insurance Co., over coverage for asbestos damages. The nearly six-year long legal battle ended after several months of negotiations with the insurers, Cooper Industries LLC, the asbestos claimants committee, and the legal representative for future asbestos claimants.

In a settlement reached, Everest Reinsurance and Mt. McKinley Insurance agreed to collectively pay $10.5 million into a trust in exchange for Southfield-based Federal-Mogul's release of rights for asbestos claim coverage under the insurers' policies. As part of the deal, the insurers will receive a release from any asbestos claims that Cooper might be able to assert against them. During the 1990s, Cooper sold a brake-pad division to Federal-Mogul and some of its asbestos damage claims stem from that unit. The settlement was reached when Federal-Mogul was in the midst of a confirmation hearing on its Chapter 11 plan. As part of the settlement agreement, the two insurers will pull out of all pending litigation with Federal-Mogul and drop their opposition to various matters in the auto-parts company's bankruptcy case, under way since October 2001. [FORBES: ASBESTOS TRUST]

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Published on Jun-24-07