Zurich, December 14, 2004 – Zurich Financial Services Group (Zurich) announces that ZC Specialty Insurance Company (ZCSIC), a US subsidiary of Zurich, has reached a comprehensive settlement with the Trustee for the Senior Living Properties Trust resolving all pending litigation between the parties arising from the bankruptcy of the Senior Living Properties (SLP) nursing home chain operating in Texas and Illinois. This settlement agreement is subject to approval by the US Bankruptcy Court for the Northern District of Texas.
The USD 47.5 million settlement results in a complete resolution of all claims against ZCSIC and its affiliates relating to SLP. In particular, it resolves a lawsuit against ZCSIC seeking damages of approximately USD 421 million, which were later increased to USD 528 million plus costs and more than USD 200 million in contingent attorney fees. ZCSIC is fully reserved for the payment of the settlement.
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On April 22, 2004, the US Bankruptcy Court for the Northern District of Texas held that ZCSIC was a de facto partner in SLP’s nursing home business, and, therefore, liable for SLP’s unpaid debts. ZCSIC appealed the Bankruptcy Court’s decision to the US District Court, Northern District of Texas. The appeal is pending, but will be dismissed as moot under the settlement agreement.
Following the April 22 decision, the Trustee filed a complaint against ZCSIC seeking damages of approximately USD 421 million, which were later increased to USD 528 million plus costs and more than USD 200 million in contingent attorney fees. Even though ZCSIC believes that the decision of the Bankruptcy Court would eventually be reversed on appeal, it has agreed to pay USD 47.5 million to resolve all claims now.
In settling the case, ZCSIC does not admit liability. The settlement agreement provides that the Trustee will release ZCSIC and its affiliates from all claims arising out of or related to SLP and its nursing home business. In addition, the settlement provides for the Bankruptcy Court to enter a permanent injunction barring all creditors and parties in interest from suing ZCSIC and its affiliates for any alleged debts resulting from a de facto partnership with SLP.
The settlement is beneficial to ZCSIC because it limits the Company’s exposure, will minimize additional litigation costs, and puts an end to the diversion of its personnel and resources. Zurich believes this settlement is a favorable outcome for ZCSIC and its affiliates.
Zurich Financial Services is an insurance-based financial services provider with a global network that focuses its activities on its key markets in North America and Europe. Founded in 1872, Zurich is headquartered in Zurich, Switzerland. Zurich has offices in more than 50 countries and employs about 62,000 people.
For further information please contact:
Media and Public Relations
Phone: +41 (0)1 625 21 00, Fax: +41 (0)1 625 26 41, E-mail: media@zurich.com
Investor Relations
Phone: +41 (0)1 625 22 99, Fax: +41 (0)1 625 36 18, E-mail: investor.relations@zurich.com
Zurich Financial Services
Mythenquai 2, P.O. Box, 8022 Zurich, Switzerland
http://www.zurich.com
SWX Swiss Exchange/virt-x: ZURN
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