Cape agrees to settle Insurer PL Litigation

The settlement agreement provided that an upfront payment of £18m, inclusive of substantial legal costs, would be paid to the insurer litigants immediately, with a deferred payment of up to £34.5m payable to the insurer litigants in the period 2018-2023.

This litigation was funded by Aviva, RSA and Zurich Insurance and related to historic employer liabilities of the insurer litigants.

The maximum amount payable under the settlement agreement has been included in the overall IDC provision at 31 December 2016 and will be paid out of the group's existing cash resources.

"The settlement of the Insurer PL Litigation does not imply any acceptance of liability on Cape's behalf," it said in a statement.

Cape said that while its defence was persuasive, it was also mindful that there remained 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.

It added that the settlement removed a significant risk to the business.

It further noted that this settlement agreement was separate from the litigation relating to the employer liability claims (Insurer EL Claims) brought by Aviva.

Cape has now been granted leave to appeal on the majority of potential appeal issues it had raised.

"At the same time, Aviva plc was granted leave to cross-appeal. The appeal hearing will be held on 25/26 July 2017."

At 10:44 GMT, shares in Cape were up 3.88% to 180.5p each.