Wave of claims sweeps Europe

A new wave of asbestos claims swept over European industrial companies yesterday, hammering their shares and dealing a fresh blow to British insurer Royal & Sun Alliance, already reeling under asbestos payouts.

Shares in Britain's second-largest general insurer plunged as much as 15 per cent as it said an engineering firm was suing it over asbestos claims, which could see it pay out millions of pounds in compensation and need to hike reserves.

Ailing Swiss industrial engineering giant ABB, one of the European companies worst hit by asbestos, said it was in talks to settle US claims that it expected to cost an additional $300 million (€300.1 million) - less than the many billions that analysts had feared.

But the spectre of more asbestos claims sent shivers across the insurance sector - already battered by the worst bear markets in decades - and prompting Alfa Laval and several other Swedish engineering companies to admit they may be sued in the United States for illnesses linked to the substance.

The revelations by the companies, all with large operations in the United States, sent jitters across European stock markets.

A Royal & Sun spokesman said British engineering group Turner & Newall had brought a suit on behalf of former employees who had suffered asbestos-related diseases. Turner & Newall is claiming that Royal & Sun is liable because it provided employer liability policies to the engineer.

ABB said in a statement that it was seeking to resolve the liabilities of Combustion Engineering Inc, a US unit for which ABB said last week it was considering seeking protection from creditors under Chapter 11 of the United States bankruptcy code.

Swedish firms facing legal threats quickly moved to reassure shareholders that they were covered by insurance and that the claims were unlikely to have major financial ramifications.

"We are not worried about the cases because we believe we have enough provisions to deal with the situation as it is," Alfa Laval's chief executive, Mr Sigge Haraldsson, said.

Among other asbestos casualties, Trelleborg slid 7 per cent, while Atlas Copco and Sandvik were off 14.50 per cent and 9 per cent respectively.

Asbestos fears also spread to Denmark, hitting the shares of wind-turbine makers Vestas and NEG Micon.

The companies rejected claims that they were exposed but admitted they were investigating whether there could be some asbestos problems in mills from the early 1980s.