Travelers Companies Notes Court Decision

The Travelers Companies Inc. announced Tuesday that the U.S. Court of Appeals for the Second Circuit has vacated the March 2006 decision of the U.S. District Court for the Southern District of New York that had approved Travelers' previously announced settlements of statutory and common law asbestos-related direct action litigation. The settlements are subject to final court approval of an order that enjoined further direct action litigation against certain Travelers entities. The Second Circuit's decision found that the court originally issuing that order did not have the jurisdiction to do so. Travelers is currently analyzing the Second Circuit's opinion to determine whether to pursue further appellate proceedings. In addition, other parties may seek further appellate review of the ruling. Travelers will not make an adjustment to the level of its asbestos reserves as a result of the Second Circuit's decision. Accordingly, the decision does not impact Travelers' earnings. Travelers said it would have preferred the finality afforded by the settlements and related injunction. However, since Travelers entered into the settlements, there have been court decisions upholding defenses similar to those asserted by Travelers in the common law direct action litigation. In addition, the asbestos litigation environment has improved generally over the past several years. As a result, Travelers' current outlook for the overall direct action litigation is more favorable than it was when Travelers entered into the settlements. If the Second Circuit's decision becomes final, the settlements will become voided and Travelers intends to litigate the direct action cases vigorously.