BAT Studied Smoking Risks--Farmers

A lawyer for Farmers Group alleged Thursday at a California Department of Insurance hearing that BAT Industries has sponsored extensive research into the health risks of smoking.

The tobacco-based conglomerate’s scientists have painted the skin of mice with tobacco tar solutions and cut open mice to paint their lungs with solutions in an effort to study whether smoking is a health risk, charged Wayne W. Smith, an attorney for Farmers Group.

BAT Industries Deputy Chairman Brian P. Garraway replied that he was not aware of such research but that he was not directly involved in the operations of BAT’s tobacco subsidiaries. He said BAT did not believe that smoking is a serious health risk.

The pair spoke in downtown Los Angeles at a hearing on the $4.3-billion hostile takeover bid for Farmers, a Los Angeles-based insurer, by Batus, BAT’s U.S. arm. Tobacco company research is controversial because some smokers and their heirs have filed lawsuits claiming in part that the companies knew or should have known that smoking may cause illness.

In a related development, the chief financial officer of Eagle Star, a BAT Industries insurance subsidiary, acknowledged that only Eagle Star’s tiny life insurance operations in Australia offer non-smoking discounts on premiums. Martin F. Broughton said the discounts were introduced last fall.

BAT spokesmen have repeatedly said that both of its insurance subsidiaries offer such discounts and that one introduced them after its acquisition by BAT. Farmers is a pioneer of non-smoking discounts.

Rory Millson, an attorney for Batus, told the Insurance Department hearing panel that it should focus on Batus’ finances, not issues such as tobacco.