U.S. Water News Online
WASHINGTON -- A unit of American International Group Inc.,
the world's largest insurer, has agreed to pay $42.5 million to clean
up hazardous waste sites in three states.
The American International Specialty Lines Insurance Co. Inc.
agreed to pay an initial $30 million payment and 10 annual payments
of $1.25 million to the Fruit of the Loom trusts to clean up
contamination at four sites in Michigan, New Jersey and Tennessee.
The sites were owned by Fruit of the Loom, which filed for
bankruptcy in 1999 and was acquired in 2002 by billionaire Warren
Buffett's Berkshire Hathaway Inc. The court set up two trusts to
receive and distribute the company's remaining assets, including its
environmental insurance policies. The trusts tried to collect
environmental cleanup costs from the AIG unit under an insurance
policy that covered response costs and natural resource damages.
But American International Specialty Lines Insurance denied
coverage and then filed suit seeking to confirm that it was not
obligated to pay the trusts, according to the Justice Department,
which intervened in the case on behalf of the Environmental
Protection Agency and other agencies.
"Insurers should take note that they may be liable for the cost of
cleaning up their bankrupt clients' environmental messes," Granta
Nakayama, assistant administrator for EPA's Office of Enforcement and
Compliance Assurance, said in a release.
Michael Arcaro, a spokesman for New York-based AIG, said the
company was "pleased to bring this matter to a conclusion on terms
that are mutually agreeable to all the parties involved."
The three largest sites in St. Louis, Mich., Bergen County, N.J.,
and Toone, Tenn., each will receive more than $12.5 million for
environmental cleanup and restoration activities. The Breckenridge,
Mich., site will receive $2.1 million.
The settlement, which is subject to a 30-day public comment
period, resolves the 2005 lawsuit between American International
Specialty Lines Insurance and the two bankruptcy trusts.
Shares of AIG rose 93 cents, or 1.7 percent, to $56.4.
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