Honeywell 2011 Annual Report Download - page 95

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, 2011, a significant portion of this coverage is with insurance
companies with whom we have agreements to pay full policy limits. 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 2006, Travelers Casualty and Insurance Company ("Travelers") filed a declaratory judgment action in the Supreme Court of New York, County of
New York against Honeywell and other insurance carriers that provide coverage for NARCO asbestos claims, seeking a declaration regarding coverage
obligations for NARCO asbestos claims under high excess insurance coverage issued by Travelers and the other insurance carriers. The other insurance
carriers asserted cross claims against Honeywell seeking declarations regarding their coverage obligations for NARCO asbestos claims under high excess
insurance coverage issued by them. Since then, the Company has entered into settlement agreements resolving all NARCO-related asbestos coverage issues
with certain of these insurance carriers, including Travelers. Approximately $57 million of remaining unsettled coverage is included in our NARCO-related
insurance receivable at December 31, 2011. Honeywell believes it is entitled to the coverage at issue and expects to prevail in this matter. In 2007, Honeywell
prevailed on a critical choice of law issue concerning the appropriate method of allocating NARCO-related asbestos liabilities to triggered policies. The
plaintiffs appealed and the trial court's ruling was upheld by the intermediate appellate court in 2009. Plaintiffs' further appeal to the New York Court of
Appeals, the highest court in New York, was denied in October 2009. A related New Jersey action brought by Honeywell has been dismissed, but all coverage
claims against plaintiffs have been preserved in the New York action. 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, we believe that the amount due from the remaining
insurance carriers 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—The following tables present information regarding Bendix related asbestos claims activity:
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