Honeywell 2005 Annual Report Download - page 104

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
inventory of NARCO asbestos related claims and payment rates expected to be established by the NARCO trust.
As of December 31, 2005 and 2004, our consolidated financial statements reflect an insurance receivable corresponding to the
liability for settlement of pending and future NARCO-related asbestos claims of $1.1 and $1.2 billion, respectively. This coverage
reimburses Honeywell for portions of the costs incurred to settle NARCO related claims and court judgments as well as defense costs
and is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance
market and the London excess market. At December 31, 2005, a significant portion of this coverage is with insurance companies with
whom we have agreements to pay full policy limits based on corresponding Honeywell claims costs. We conduct analyses to
determine the amount of insurance that we estimate is probable that we will recover in relation to payment of current and estimated
future claims. While the substantial majority of our insurance carriers are solvent, some of our individual carriers are insolvent, which
has been considered in our analysis of probable recoveries. 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.
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 a plan of reorganization will be 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 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.
Friction Products—Honeywell's Bendix Friction Materials (Bendix) business manufactured automotive brake pads that contained
chrysotile asbestos in an encapsulated form. There is a group of existing and potential claimants consisting largely of individuals that
allege to have performed brake replacements.
From 1981 through December 31, 2005, we have resolved approximately 78,000 Bendix related asbestos claims including trials
covering 122 plaintiffs, which resulted in 116 favorable verdicts. Trials covering six individuals resulted in adverse verdicts; however,
two of these verdicts were reversed on appeal, a third will shortly be appealed, and the remaining three claims were settled. The
following tables present information regarding Bendix related asbestos claims activity:
Years Ended
December 31,
Claims Activity 2005 2004
Claims Unresolved at the beginning of year 76,348 72,976
Claims Filed 7,520 10,504
Claims Resolved (6,890) (7,132)
Claims Unresolved at the end of year 76,978 76,348
December 31,
Disease Distribution of Unresolved Claims 2005 2004
Mesothelioma and Other Cancer Claims 4,604 3,534
Other Claims 72,374 72,814
Total Claims 76,978 76,348
Approximately 30 percent of the approximately 77,000 pending claims at December 31, 2005 are on the inactive, deferred, or
similar dockets established in some jurisdictions for claimants who allege
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