Honeywell 2005 Annual Report Download - page 242

2005, we recognized charges of approximately $131 million for write-offs of certain amounts due from insurance carriers. At June 30, 2005, we had amounts
receivable from our insurers of approximately $375 million representing probable reimbursements associated with our liability for pending claims and
previously settled and paid claims, and for amounts due under negotiated fixed payment streams.
On a cumulative historical basis, Honeywell has recorded insurance receivables equal to approximately 50 percent of the value of the underlying
asbestos claims recorded. However, because there are gaps in our coverage due to insurance company insolvencies, certain uninsured periods, and insurance
settlements, this rate is expected to decline for any future Bendix related asbestos liabilities that may be recorded. Future recoverability rates may also be
impacted by numerous other factors, such as future insurance settlements, insolvencies and judicial determinations relevant to our coverage program, which
are difficult to predict. Assuming continued defense and indemnity spending at current levels, we estimate that the cumulative recoverability rate could
decline over the next five years to approximately 40 percent.
Honeywell believes it has sufficient insurance coverage and reserves to cover all pending Bendix related asbestos claims. Although it is impossible to
predict the outcome of pending claims or to reasonably estimate losses which could arise from future Bendix related asbestos claims, we do not believe that
such claims would have a material adverse effect on our consolidated financial position in light of our insurance coverage and our prior experience in
resolving such claims. If the rate and types of claims filed, the average indemnity cost of such claims and the period of time over which claim settlements are
paid (collectively, the "Variable Claims Factors") do not substantially change, Honeywell would not expect future Bendix related asbestos claims to have a
material adverse effect on our results of operations or operating cash flows in any fiscal year. No assurances can be given, however, that the Variable Claims
Factors will not substantially change.
Refractory and Friction Products – NARCO and Bendix asbestos related balances are included in the following balance sheet accounts:
June 30, 2005 December 31, 2004
Other current assets $ 203 $ 150
Insurance recoveries for asbestos related liabilities 1,299 1,412
$ 1,502 $ 1,562
Accrued liabilities $ 695 $ 744
Asbestos related liabilities 1,823 2,006
$ 2,518 $ 2,750
During the six months ended June 30, 2005, we paid $280 million in indemnity and defense costs related to NARCO and Bendix claims and received
$99 million of asbestos related insurance recoveries. We also recognized a charge of $84 million for Bendix related asbestos claims filed and defense costs
incurred during the first six months of 2005, net of probable insurance recoveries. The asbestos related charge also included the net effect of a settlement of
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