ABB Raises Spending on Asbestos Claims
Jan. 30, 2002
ZURICH, Switzerland (AP) _ Swiss-Swedish industrial group ABB AG said Wednesday it is raising to nearly $1 billion its provisions for pending U.S. asbestos claims, resulting in a loss for 2001.
The group said it was setting aside another $470 million for the claims pending against its Combustion Engineering unit, raising the total provisions to $940 million.
Last year, the provisions totaled $590 million, but about $120 million of that was spent in claims settlements, legal fees and other charges, a company spokesman said.
In a statement issued from its Zurich headquarters ABB did not elaborate on what the overall loss would be for 2001. ABB will disclose its 2001 results Feb. 13. In 2000 the group reported a net profit of $1.4 billion on sales of $23 billion.
In midday trading on the Zurich exchange, ABB shares fell 7.2 percent to 15.40 Swiss francs ($9.06).
ABB said about 94,000 asbestos claims were pending against Combustion Engineering, which is based in Windsor, Conn., as of Dec. 31. About 55,000 new claims were filed last year, compared with 39,000 the previous year.
The claims stem from exposure to asbestos in products supplied before the mid-1970s by Combustion Engineering, which ABB acquired in 1990. Asbestos is a natural mineral fiber which was widely used in building materials until the 1970s, when it was found that exposure to asbestos could cause certain illnesses.
``In response to the increase in claims, Combustion Engineering has intensified its efforts to identify which claims are valid and which claims that appear not to be valid,'' the statement said.
The company said it was settling valid claims and disputing claims that appeared to be invalid. The number of claims settled last year was 27,000, down from 34,000 settled the previous year, it said.
ABB said the average amount paid per claim last year was $6,069. Insurance has covered less than half of the payments, said ABB.
ABB chief executive Jorgen Centerman told Dow Jones Newswires on Wednesday that the provisions for the asbestos claims is now adequate ``based on all the facts we have today.''