Casino owner Pinnacle Entertainment Inc. settled a lawsuit with two insurance companies over Hurricane Katrina damage to the company’s property in Mississippi.
Allianz Global Risks U.S. Insurance Co. agreed to pay $48 million on top of $5 million it already paid to Pinnacle to satisfy a $50 million policy, according to documents filed May 13 with the Securities and Exchange Commission. The settlement includes $3 million in interest, Pinnacle said in the filing.
The agreement calls for Allianz to pay Pinnacle by June in exchange for a full release of all claims for damage at Pinnacle’s former Casino Magic property in Biloxi, Miss., the filing said. The lawsuit would be dismissed with prejudice.
The lawsuit and settlement with Allianz also covered damage at Pinnacle’s Boomtown New Orleans casino.
The riverboat casino on the west bank of the Mississippi River was evacuated and closed for about one month after Katrina devastated the Gulf Coast.
A spokeswoman for Pinnacle declined to comment beyond the SEC filing. An Allianz official did not immediately return a phone call seeking comment.
Pinnacle said in the filing that it also was paid nearly $37 million under a settlement with Arch Specialty Insurance Co. in March. Claims are still pending against a third carrier, RSUI Indemnity Co.
In a 2006 federal lawsuit, Las Vegas-based Pinnacle claimed the insurance companies improperly blamed damage at the Casino Magic property in Biloxi on flooding instead of a hurricane, which was specified as a weather catastrophe in their policies. Flood damage was covered up to $100 million in losses while a weather catastrophe was covered up to $400 million.
Court documents said Casino Magic, then a land-based hotel with a casino barge floating in Biloxi Bay, “suffered dramatic damage” when Katrina hit in August 2005.
The casino barge detached from its moorings and was carried across a four-lane interstate, while the hotel exterior was damaged by wind and its interior was exposed to rain, court documents said.
The property was sold to Harrah’s Entertainment Inc. in May 2006.
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