Carnival Posts $851M Insurance Recoverables from Costa Concordia

The grounded cruise ship Costa Concordia off the Tuscan island of Giglio, Italy, on Jan. 24. (AP Photo/Pier Paolo Cito) The grounded cruise ship Costa Concordia off the Tuscan island of Giglio, Italy, on Jan. 24. (AP Photo/Pier Paolo Cito)

NU Online News Service, April 2, 1:46 p.m. EST

Carnival Corp. lists $851 million in insurance recoverables among its assets for the 2012 first quarter, according to a filing with U.S. Securities and Exchange Commission.

Carnival says “substantially all” of the insurance recoverables relate to the Costa Concordia, which ran aground and capsized off the island of Giglio, Italy, on Jan. 13.

The Wreck of the Costa Concordia -- Slideshow

The cruise-ship company early in March reported a $139 million 2011 first-quarter net loss before detailing its earnings in an SEC filing March 30.

Much of the insurance recoverables relate to the company writing off the $515 million value of the Costa Concordia because it was deemed a total loss. Carnival says it doesn’t face hull and machinery insurance deductibles.

Carnival did face a $10 million deductible for third-party personal-injury liabilities, which is included in $29 million in Costa Concordia-related expenses not covered by insurance during the first quarter.

 Due to its insurance coverage, Carnival says it doesn’t expect future expenses from the Costa Concordia disaster to affect operations.

“We expect to continue to incur Costa Concordia-related costs in the future,” Carnival says. “Although at this time these costs are not yet determinable, we do not expect them to have a significant impact on our results of operations because we believe these additional costs will be recoverable under our insurance coverage.”

Asked during a conference call last month whether he was comfortable that Carnival’s insurance coverage will cover all eventualities, Howard S. Frank, Carnival’s chief operating officer said, “Yes. We’re comfortable.”

Carnival says in the SEC filing that it has coverage for third-party claims related to personal injury, loss of life, loss or damage to personal property, business interruption or environmental damage. In a closer look at litigation, Carnival acknowledges the various lawsuits against it, but reasserts its outlook that many of the claims are covered by insurance. Any remaining liability “is typically covered by our self-insurance retention levels,” Carnival adds.

Insured losses appear to be quickly approaching the $1 billion mark predicted by Moody’s Investors Service.


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