The Hartford to pay $650M for Boy Scouts sexual abuse claims
HARTFORD — The Hartford will pay $650 million to help settle sexual abuse claims against the bankrupt Boy Scouts of America, according to an agreement announced Friday by the insurance giant and the BSA.
That payout to a proposed settlement trust to compensate abuse survivors would supplement contributions from the national BSA, local councils, participating chartered organizations and other participating insurers, according to a statement issued by the BSA.
The claims covered in the settlement between The Hartford and the BSA are related to policies mostly issued in the 1970s, although the company did not specify the number of claims. In exchange for the $650 million payment, the BSA and its local councils would fully release The Hartford from any obligation under policies it issued to the BSA and its local councils, according to the company.
“We are pleased with the significant progress we have made in our Chapter 11 case through ongoing mediation,” the BSA said in its statement. “Our agreement with The Hartford is an encouraging step towards achieving a global resolution that will promote the BSA’s efforts to equitably compensate survivors and continue the mission of scouting.”
The agreement was reached after “extensive negotiations,” The Hartford said.
In the third quarter of 2021, The Hartford and the BSA hope to receive court approval for their agreement, “but this could be delayed for various procedural reasons,” the company also said in its announcement.
Based in Irving, Texas, the BSA sought bankruptcy protection last February in an effort to halt hundreds of lawsuits and create a compensation fund for men who were molested as youngsters decades ago by scoutmasters or other leaders.
On Monday, attorneys for the BSA told a Delaware bankruptcy judge that they planned to file a new re-organization plan, after gaining little support for a previous proposal that had been criticized by attorneys for abuse victims.
The BSA’s previous plan called for a $300 million contribution by local councils to a victims trust, about $115 million in cash and non-insurance assets from the BSA, as well as the assignment of BSA and local council insurance policies. In return, the 253 local councils and thousands of sponsoring organizations would be released from further liability.
An official tort claimants committee, which acts as a fiduciary for all abuse victims in bankruptcy, has estimated the value of approximately 84,000 sexual abuse claims at about $103 billion, describing those estimates as “extremely conservative.”
“We are committed to continuing our mediation efforts with all parties and look forward to sharing additional updates as these discussions progress,” the BSA added in its statement.
The Hartford’s $650 million payout represents a pre-tax number, with the company’s announcement outlining other financial repercussions.
“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 announcement said.
In addition, the company estimates that “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.”
Unrelated to the BSA settlement, The Hartford is facing an uncertain future after it rejected last month a proposed $23 billion acquisition by insurance multinational Chubb.
State legislators are concerned about how a prospective acquisition would affect The Hartford. Ranking No. 160 on last year’s Fortune 500 list, it represents the largest publicly traded insurance company headquartered in Connecticut and employs about 6,100 in the state.