NEW YORK – Energy and construction company Halliburton Co. (HAL) on Tuesday said it had settled a group of 30 asbestos lawsuits for an unspecified amount of money.
The settlement involved cancer cases pending in New York and was "at a value consistent with the company's historical averages for these types of claims," it said in a release.
Halliburton has resolved 207,000 asbestos-related claims through settlements or court proceedings since 1976 at a total cost of $162 million, according to company filings as of mid-May. It has received, or expects to receive, all but $64 million of this cost from insurers.
"The big deal here is that the company is being much more public with its disclosures of cases where they have reached an outcome," said Joe Agular, analyst at Johnson Rice.
Agular, who rates Halliburton stock a "buy," said there was some discussion of these cases at an analyst meeting with management last week, but said he was uncertain about the total amount of this settlement.
These discussions -- and the fact that this case was settled in New York where many stock analysts are located -- spurred Halliburton to make an official announcement of the resolution, something it has usually not done.
"We sent out this release because there were a lot of questions about this specific case from the analysts in New York," said Cedric Burgher, vice president of investor relations at Halliburton.
Burgher said the company would not comment on the exact amount paid for specific claims, but the information would be made available when it reports its next quarterly results. He said this resolution would not have a material affect on its second-quarter results.
SETTLING WITH SICK PEOPLE
At the end of the first quarter of 2002, there were still 292,000 open asbestos claims against Halliburton.
Based on its past experience, the company estimates the cost of resolving those claims at $753 million, including $585 million it expects to be covered by insurance.
A naturally occurring mineral that was once dubbed a "miracle" for its strength and fire-resistant properties, asbestos was widely used for construction and manufacturing until it was determined that inhaling its fibers could lead to respiratory diseases and various types of cancer including mesothelioma.
Mesothelioma is a deadly type of cancer that affects the area around the lungs and abdomen. The disease is found almost exclusively in those who have had prolonged asbestos exposure.
Burgher said this case drew more attention than many of the others it had resolved since it was being adjudicated in New York and dealt with some higher-than-average individual settlements.
"These cases tend to be the most expensive kinds -- when the people are actually sick," he said. "In many cases, these people are not even still living."
He added that, before insurance, the company's average payout was about $785 per claim. But in the past two years he said the company has settled about 400 mesothelioma cases with an average payout, before insurance, of $12,500 per claim.
Burgher said there were also some lung cancer victims included in this settlement.
Halliburton's resolution of these 30 cases is the most recent large settlement of asbestos-related litigation.
Chemical and paint maker PPG Industries Inc. earlier this month said it agreed to turn over $2.7 billion to people injured by asbestos. PPG said it would take an after-tax charge of $500 million to cover its share of the associated costs -- one of the largest corporate asbestos charges -- while a group of more than 30 insurers will pay the rest.
Agular said the PPG resolution was different than Tuesday's Halliburton news since the amount covered all present and future cases of asbestos-related claims against the company.
These settlements may cost U.S. companies more than $200 billion in all, according to analysts. The problem has battered many of the most recognized manufacturing names in the United States, pushing several into bankruptcy as claims multiply.
Halliburton shares were trading up 34 cents, or 1.8 percent, at $19.44, their highest level since a fall of 40 percent in early December on news of a $30 million asbestos damages award against the company. In the past year the shares have traded between $48.20 and $8.75.