Honeywell 2003 Annual Report Download - page 275

legal basis for such challenges and we believe that it is probable that we will
prevail in the resolution of, or in any litigation that is brought regarding
these disputes and, as of September 30, 2003, we have recognized approximately
$550 million in probable insurance recoveries from these carriers. We made
judgments concerning insurance coverage that we believe are reasonable and
consistent with our historical dealings with our insurers, our knowledge of any
pertinent solvency issues surrounding insurers and various judicial
determinations relevant to our insurance programs. Based on our analysis, we
recorded insurance recoveries that are deemed probable through 2018 of $1.8
billion. A portion of this insurance has been received, primarily from Equitas,
as discussed below.
During the nine months ended September 30, 2003, we made asbestos related
payments of $467 million, including legal fees. During the nine months ended
September 30, 2003, we received $477 million in insurance reimbursements
including $472 million in cash received from Equitas related to a comprehensive
policy buy-back settlement of all insurance claims by Honeywell against Equitas.
The settlement resolves all claims by Honeywell against Equitas arising from
asbestos claims related to NARCO and Bendix.
Projecting future events is subject to many uncertainties that could cause
the NARCO related asbestos liabilities to be higher or lower than those
projected and recorded. There is no assurance that ongoing settlement
negotiations will be successfully completed, that a plan of reorganization will
be proposed or confirmed, that insurance recoveries will be timely or whether
there will be any NARCO related asbestos claims beyond 2018. Given the inherent
uncertainty in predicting future events, we plan to review our estimates
periodically, and update them based on our experience and other relevant
factors. Similarly we will reevaluate our projections concerning our probable
insurance recoveries in light of any changes to the projected liability or other
developments that may impact insurance recoveries.
In October 2003, we received approximately $150 million in cash from
various insurance companies related to our NARCO asbestos claims.
We are monitoring proposals for federal asbestos legislation pending in the
United States Congress. Due to the uncertainty surrounding the proposed
legislation, it is not possible at this point in time to determine what impact
such legislation would have on the NARCO bankruptcy strategy, the proposed
transaction with Federal-Mogul, or our asbestos liabilities and related
insurance recoveries.
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