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Warren Buffet’s Berkshire Hathaway acquires asbestos liabilities
July 21st, 2010 - In exchange for $2 billion, Berkshire Hathaway Inc., which is owned by Warren Buffett, agreed to assume and manage all liabilities connected to asbestos claims from the commercial insurance company CNA Financial.
The deal, which is scheduled to be completed this quarter, will allow CNA to dump about $1.6 billion in net asbestos liabilities, Bloomberg reports. The insurer is expecting to lose about $375 million on the transaction.
According to a statement released by Berkshire, the company will be responsible for handling asbestos claims and collect reinsurance at a value of about $200 million from third parties. Berkshire's National Indemnity Company will establish a $2.2 billion trust to manage the claims.
The ongoing asbestos claims are a result of the mineral's dangerous properties. When asbestos fibers are inhaled, particles can become embedded in the lungs, causing asbestosis, lung cancer or mesothelioma.
Buffett has agreed to take on the claims in exchange for access to insurance reserves that he can invest. In 2006, Berkshire executed a similar transaction, assuming the asbestos risks held by Lloyd's of London.
Whereas Berkshire has used the asbestos claims as a business transaction, numerous companies have been forced to declare bankruptcy and establish trusts to stem the tide of ongoing asbestos litigation.
Have You or a Loved One Been Diagnosed with Mesothelioma? For those who have been diagnosed with mesothelioma cancer that can be linked to asbestos exposure caused by a product or former employer, you may be entitled to financial compensation. Contact an experienced asbestos attorney to learn more about your rights and to see if pursuing a mesothelioma settlement is in your best interest.
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