Hartford (HIG) Agrees To Settlement With The Boy Scouts Of America And Pre-announces Estimated First Quarter Prior Year Development And Catastrophe Losses
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The Hartford (NYSE: HIG) today announced that it has entered into a Settlement Agreement and Release with the national organization of the Boy Scouts of America (BSA) pursuant to which The Hartford will pay $650 million, before tax, for sexual abuse claims associated with policies mostly issued in the 1970s. The agreement, entered into after extensive negotiations, contemplates that, in exchange for The Hartford’s payment, the BSA and its local councils will fully release The Hartford from any obligation under policies it issued to the BSA and its local councils.
The agreement is in connection with BSA’s Chapter 11 bankruptcy and will become effective upon the occurrence of certain conditions, including confirmation of the BSA’s global resolution plan, executed releases from the local councils, and approval from the abuse claimants and bankruptcy court. The Hartford and the BSA hope to receive court approval in the third quarter of 2021, but this could be delayed for various procedural reasons.
The Hartford estimates unfavorable prior year development of approximately $225 million, before tax, in first quarter 2021 that includes, among other items, a charge to increase reserves for the BSA settlement above the amount previously reserved for this exposure.
The Hartford also estimates current accident year catastrophe losses, net of reinsurance, of approximately $214 million, before tax, including approximately $176 million, before tax, from February winter storms in Texas and other areas.
The Hartford is pre-releasing certain preliminary financial information for its 2021 first quarter, including estimated current accident year catastrophe losses and prior year reserve development. Such preliminary financial information reflects estimates and is subject, among other things, to the completion of The Hartford’s quarter-end financial closing processes.
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