United Fire & Casualty loses in Katrina lawsuit

A federal jury in Louisiana has ruled that United Fire & Casualty Co. should pay $21 million to five New Orleans grocery stores and their owner to cover damages caused by Hurricane Katrina.

The lawsuit was filed by Marc Robert II to recover damages for five Marketfare supermarkets in the New Orleans area. Also awarded damages were members of the John Schwegmann family, who owned the building and property where one of the stores was located.

Cedar Rapids-based United Fire disputed the verdict saying some of the claimed damages were the result of flooding and not covered by the policy.

"We are disappointed in the decision by the jury because we believe we have already made payment for losses covered under the terms of the contract, and that we have no obligation to make payment for damage attributable to flood," CEO Randy Ramlo said in a statement released Friday.

A jury trial began May 19 and ended Monday with a verdict returned within six hours.

The jury awarded damages for the stores for loss of contents due to wind and other losses due to vandalism, theft or looting.

U.S. District Judge Carl Barbier entered a final judgment in the case Wednesday.

United Fire said it will likely post a net loss of $13 million, about $8 million after taxes, or 31 cents per share, if the verdict stands. It plans to seek a judicial review of the jury's decision and may file an appeal.

United Fire also reported a preliminary estimate of damages for storm related losses in the Midwest. It said it expects to post $4 million to $6 million, or 10 cents to 14 cents per share in losses, which includes claims from the May 25 tornado in Parkersburg, where 220 homes and 22 businesses were destroyed and five people died.

United Fire insured the city, several commercial businesses and some homes in the northeast Iowa town.

United Fire is a personal and commercial property, casualty and life insurance company with regional offices in Denver and Galveston, Texas.