Huntington Ingalls Industries, a Mississippi shipbuilder, has settled its Katrina insurance claim with FM Global. The insurer will pay $180 million in the settlement, which came in a lawsuit involving the shipbuilder’s losses from Hurricane Katrina in 2005 at facilities in Pascagoula and Avondale, La. The settlement information was contained in a filing last month with the Securities and Exchange Commission (SEC). On September 6 the company reached the settlement with FM Global.
A trial against FM Global was due to start in October in U.S. District Court for the Central District of California. The terms of the settlement agreement are confidential. Ingalls filed a lawsuit against Aon, the company’s broker in connection to the policy with FM Global, alleging breach of contract, negligence and misrepresentation. The complaint also sought declaratory relief.
The company reserved its rights against Aon in the settlement with FM Global and will continue pursuing its claims against Aon. The company’s Ingalls operations were significantly impacted by Hurricane Katrina. The company’s shipyards in Louisiana and Mississippi sustained significant windstorm damage from the hurricane. It was alleged in the suit that as a result of the storm, the company incurred costs to replace or repair destroyed or damaged assets, suffered losses under its contracts, and incurred substantial costs to clean up and recover its operations.
At the time of the storm, the company had a comprehensive insurance program that provided coverage for, among other things, property damage, business interruption impact on net profitability, and costs associated with clean-up and recovery. The SEC filing noted the company has recovered a portion of its Hurricane Katrina claim, including $62 million in recovery of lost profits in 2007. In November 2011, the company recovered an additional $18.8 million from Munich-American Risk Partners, one of its two remaining insurers with whom a resolution had not been reached. This came as the result of a settlement in an arbitration proceeding.
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