Honeywell 2008 Annual Report Download - page 123

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
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 of recovery 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.
In the second quarter of 2006, Travelers Casualty and Insurance Company ("Travelers") filed a lawsuit
against Honeywell and other insurance carriers in the Supreme Court of New York, County of New York,
disputing obligations for NARCO-related asbestos claims under high excess insurance coverage issued by
Travelers and other insurance carriers. Approximately $340 million of coverage under these policies is included in
our NARCO-related insurance receivable at December 31, 2008. Honeywell believes it is entitled to the coverage
at issue and has filed counterclaims in the Superior Court of New Jersey seeking, among other things,
declaratory relief with respect to this coverage. In the third quarter of 2007, Honeywell prevailed in the New York
action on a critical choice of law issue concerning the appropriate method of allocating NARCO-related asbestos
liabilities to triggered policies. The Court's ruling is subject to appeal. Honeywell expects to prevail in this matter
based upon (i) our understanding of relevant facts and applicable law, (ii) the terms of insurance policies at issue,
(iii) our experience on matters of this nature, and (iv) the advice of counsel, and thus we believe that the amount
due from Travelers and other insurance carriers ($340 million at December 31, 2008) is probable of recovery.
While Honeywell expects to prevail in this matter, an adverse outcome could have a material impact on our
results of operations in the period recognized but would not be material to our consolidated financial position or
operating cash flows.
Projecting future events is subject to many uncertainties that could cause the NARCO related asbestos
liabilities or assets to be higher or lower than those projected and recorded. There is no assurance that the plan
of reorganization will become final, 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
parts that contained chrysotile asbestos in an encapsulated form. Existing and potential claimants consist largely
of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of
individuals who performed brake replacements.
From 1981 through December 31, 2008, we have resolved approximately 117,000 Bendix related asbestos
claims. We had 127 trials resulting in favorable verdicts and 12 trials resulting in adverse verdicts. Two of these
adverse verdicts were reversed on appeal, three claims were settled and the remaining have been or will be
appealed. The following tables present information regarding Bendix related asbestos claims activity:
Claims Activity Years Ended
December 31,
2008 2007
Claims Unresolved at the beginning of year 51,658 57,108
Claims Filed 4,003 2,771
Claims Resolved (3,710) (8,221)
Claims Unresolved at the end of year 51,951 51,658
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