This litigation was funded by Aviva, RSA Group and Zurich Insurance Group and relates to historic employer liabilities of the insurer litigants.<\/p>\n
The settlement does not imply any acceptance of liability on Cape’s behalf.<\/p>\n
Cape said: “Following the end of the trial on 23 February 2017, the board received an updated opinion from leading counsel which reinforced the board’s view that the merits of the group’s defence are persuasive and that there are substantial evidential burdens upon the insurer litigants. <\/p>\n
“Nonetheless, and as previously disclosed, the board is mindful that there remains a risk that the insurer PL litigation could have a material adverse impact on the scheme, and in turn upon the group and its stakeholders. <\/p>\n
“The board has therefore concluded that it is in the best interests of Cape and its shareholders to settle at the agreed level outlined below, thus removing a significant risk to the business, removing the distraction of a likely protracted appeals process and enabling management to focus on the development of the core business.”<\/p>\n
Cape said the settlement agreement provided that an upfront payment of \u00a318m, inclusive of substantial legal costs, would be paid to the insurer litigants immediately, with a deferred payment of up to \u00a334.5m payable to the litigants over the period from 2018 to 2023. <\/p>\n
The maximum amount payable under the settlement agreement has been included in the overall industrial disease claim provision at 31 December 2016 and will be paid out of the group’s existing cash resources.<\/p>\n
Cape added: “The settlement agreement is separate from the litigation relating to the employer liability claims brought by Aviva plc. <\/p>\n
“The company has previously disclosed that, following a determinant judgment on 19 July 2016, Cape Intermediate Holdings Limited was seeking leave to appeal a number of aspects of such judgment and that the company had increased the provision held against industrial disease claims by \u00a39.7 million. <\/p>\n
“CIH has now been granted leave to appeal on the majority of potential appeal issues it had raised.<\/p>\n
“At the same time, Aviva plc was granted leave to cross-appeal. <\/p>\n
“The appeal hearing will be held on 25-26 July.” <\/p>\n
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