NEW YORK (Reuters) - New Bermuda-based insurer St. George Re said on Wednesday it would begin operations as the first company dedicated solely to offering U.S. companies protection against asbestos claims.
St. George said it had arranged with units of Berkshire Hathaway Inc (BRKa.N) (BRKb.N), the insurance and investment company run by Warren Buffett, for reinsurance coverage that would let it underwrite the largest of claims, according to St. George Chief Executive Colin Barnes.
“We are currently in the underwriting process for over $5 billion of coverage,” Barnes said in an interview.
Barnes said the insurance was designed “to remove uncertainty and provide resolution to historical corporate asbestos risk.”
Asbestos, a fibrous material widely used in industry and construction until the 1980s, is known to cause lung cancer and other respiratory diseases, and can take as long as 40 years to be diagnosed. It has cost cost companies an estimated $70 billion and forced more than 70 firms into bankruptcy.
St. George Re said it would offer insurance coverage to protect against risk of loss from future asbestos claims and the costs of defending against those claims.
Founding investors of St. George Re are funds managed by Context Capital Management LLC, Plainfield Asset Management LLC, and Silver Creek Capital Management LLC.
The Berkshire units’ arrangement with St. George Re is not the first time the Omaha, Nebraska-based insurer has been willing to take asbestos exposure.
In March a Lloyd’s of London insurer transferred billions of dollars of liabilities to Berkshire Hathaway. Insurance executives have said recently that asbestos claims are beginning to decline due to court decisions that limit the number of filers.
Berkshire owns more than 70 businesses, including auto insurer Geico Corp and reinsurer General Re Corp. It ended September with more than $47 billion in cash.
“We are small on people but big on capital,” said Brian Snover, vice president and general counsel at Berkshire’s reinsurance division in an interview. “St. George Re has the understanding of the market.”
Reporting by Ed Leefeldt, editing by Dave Zimmerman