GE Takes $115 Million Expense on Asbestos Cases

February 19, 2007 - Forbes reports that General Electric Company (GE) will record a $115 million after-tax expense in the first quarter of this year after losing a 10-year battle with its insurers in regards to thousands of asbestos claims.

According to the article, “the New York State Court of Appeals upheld lower-court rulings preventing GE from tapping secondary insurance to cover claims brought mostly by individuals exposed to asbestos-insulated turbines.”

A spokesman for the company says that GE has 509,000 thousand asbestos cases pending through 2006 and that they have already paid approximately $500 million to settle claims involving their turbines, which were insulated with asbestos manufactured not by GE but by various asbestos manufacturers.

GE spokesman Gary Sheffer said in a statement that GE was "disappointed in the decision, which is contrary to how the majority of courts have ruled." Sheffer said GE was reviewing its options.

The newspaper account noted that the lawsuit centered on whether GE's asbestos claims should be treated as one incident under its insurance policies issued between 1965 and 1985, or whether each claim should be treated individually. GE was responsible for the first $5 million in coverage on each occurrence. After the first $5 million, GE could access more than $2 billion in secondary insurance.  The court ruled that each claim was a single occurrence.

“GE was attempting to change a long-standing New York law on how the number of occurrences is decided in this context," said Michael Balch, of Skadden, Arps, Slate, Meagher & Flom LLP, who represented one of the insurers. He said GE wanted to consider as one occurrence "400,000-plus cases arising at thousands of sites across the country dating back 70 to 80 years.