Norwalk, CT: (Mar-28-08) A class action securities lawsuit was brought against Xerox Corp., by buyers of Xerox common stock and bonds from Feb. 17, 1998, through Jun. 27, 2002. Sources revealed that in a recent development, Xerox Corp. agreed to resolve the eight-year-old securities lawsuit with a $670 million payout.
Xerox officials stated that the payout does not include a $10 million layer of Xerox's program that is uncollectible, as insurer Reliance Insurance Co. went into runoff in 2001. Sources stated that Chubb Corp., a Warren, NJ, based company, wrote $25 million of limits, led the coverage, and Marsh Inc. placed the program. The company was also provided $25 million of low excess layer limits by National Union Fire Insurance Co. of Pittsburgh, PA, a subsidiary of New York-based American International Group Inc. National Union had attempted to rescind its coverage, but a New York state court thwarted the insurer in November 2004.
Xerox officials said that the company will cover most of the loss itself and take a $491 million after-tax charge against its first-quarter 2008 results to reflect the settlement as well as to reserve for other pending securities litigation. Under the terms of the deal, the company has up to 2008 to cover its installments. Additionally, the agreement will see former Xerox auditor KPMG L.L.P. would contribute $80 million more to the settlement fund. [
