The company, the nation’s seventh-largest insurer, said it would add $3.97 billion to its asbestos reserves, bringing them to $5.96 billion. The increase will result in a net loss of $1.39 billion for the first quarter after reductions for taxes and coverage provided by other insurers.
To offset the increase, the company said it hoped to raise $1.85 billion soon through the sale of stock, bonds and other securities and that it was cutting 1,500 jobs, about 5 percent of its work force. It also said it was getting out of the volatile business of reinsurance, or providing coverage to other insurers.
Hartford’s big increase comes as insurers, industrial companies, plaintiffs’ lawyers, unions, the Bush administration and Congress are trying to agree on a global settlement intended to end asbestos litigation and place a cap on total potential payouts at $100 billion to $125 billion.
Even though the amount is steep, second only to the agreement of the tobacco industry in 1998 to pay $246 billion, it would eliminate uncertainty about asbestos costs for insurers and corporations that made or installed asbestos products. It would reduce the share of claims money that now goes to lawyers and it could lead to reduced benefits for victims of asbestos. But the victims could avoid years of legal struggle and the lawyers could move on to something else.