Clapper, Patti, Schweizer and Mason

U.S. investor Warren Buffett has negotiated a $2 billion dollar deal where Berkshire Hathaway Inc.’s National Indemnity Co. unit will acquire U.S. insurer CNA’s asbestos and other environmental liabilities.

CNA insured companies who manufactured and/or supplied asbestos containing products include A.P. Green Industries, A.P. Green Services, Bigelow–Liptak Corporation, Robert A. Keasbey Company, Burns & Roe Enterprises, Inc. and W.R. Grace & Co.  CNA is the 7^th largest commercial insurer and will assume responsibility to handle all asbestos and environmental pollution claims going back to January 1, 2010.

The transfer gives more assurances to CNA’s stakeholders and gives Buffet cash flow that he can use to invest now and perhaps even prior to paying out claims. Mr. Buffett is an expert when it comes to the insurance industry and no stranger to asbestos litigation. Back in 2006, Berkshire made an even larger deal by taking on asbestos and other environmental claims of Lloyd’s of London’s Equitas in exchange for $7.1 billion.

Although much use of asbestos is now highly regulated, mesothelioma and asbestos related cancer claims continue for a variety of reasons.  One, there is a long latency period of 10 to 40 years after initial exposure before symptoms of illness develop.  Another is that many cars, ships, and buildings that were constructed with asbestos containing materials require maintenance, repair or removal which can cause more recent exposure and ongoing development of disease.

Hopefully as use of asbestos is restricted or banned and safety measures are taken to prevent exposure, mesothelioma claims will eventually become non-existent.