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ASE reaches settlement with insurers

Posted: 30 Jun 2006 ?? ?Print Version ?Bookmark and Share

Keywords:settlement? insurance? Advanced Semiconductor Engineering? ASE? packaging?

Taiwan's Advanced Semiconductor Engineering Inc. (ASE) on announced Wednesday (June 28) it has reached a $247 million settlement with insurers regarding a fire that damaged its plant in 2005.

As reported last year, a fire broke out at a building within the Chungli, Taiwan-based facilities of ASE, the world's largest chip-packaging vendor. The affected building in Chungli housed no more than one-tenth of ASE's consolidated semiconductor packaging and testing capacity. It also impacted its substrate production.

ASE said that it is still "in the process of repairing certain assets damaged by the fire and determining how much of the losses originally recognized in connection with the fire will be reversed as a result of such repairs."

The company did reach a settlement with nine co-insurers over the fire. The co-insurers included Zurich Insurance (Taiwan) Ltd, Fubon Insurance Co. Ltd, Cathay Century Insurance Co. Ltd, Shinkong Insurance Co. Ltd, Mingtai Fire & Marine Insurance Co. Ltd, The First Insurance Co. Ltd, Taiwan Fire & Marine Insurance Co. Ltd, Chung Kuo Insurance Co. Ltd and South China Insurance Co. Ltd.

The final settlement amount, after subtracting the deductible amount from the total insured loss, is $247 million. The insurers already paid ASE an interim payment in the amount of $70.4 million in mid-October 2005, which is to be deducted from the final settlement amount.

Therefore, the insurers will pay ASE a final payment of $177.6 million in accordance with the provisions of the policy.

It will announce the impact to its earnings when it reports its 2Q consolidated financial results, which is scheduled for August 1.

Separately, subcontractor ASE Test Ltd also said that a final settlement amount has been reached with its parent company, ASE. The final settlement amount with respect to damages incurred by ASE Test as a result of the fire is $26 million.

The insurers already paid an interim payment in the amount of $0.4 million in mid-October 2005 with respect to damages incurred by ASE Test. This interim payment will be deducted from the final settlement amount and the insurers will pay a final payment of $25.6 million with respect to damages incurred by ASE Test in accordance with the provisions of the fire policy.

As the settlement amount is now confirmed, ASE Test expects to recognize approximately $25 million of non-operating income in the second quarter of 2006. The company will announce the impact to its earnings when it reports its 2Q06 consolidated financial results, which is scheduled for August 2, 2006.

- Mark LaPedus
EE Times




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