20th Century Industries has agreed to a $500,000 settlement of a shareholder lawsuit that alleged mismanagement of the company's earthquake insurance coverage.
The Woodland Hills-based parent of 20th Century Insurance has agreed to pay attorneys for shareholders who filed the suit up to $500,000. And the company agreed to set up an ad hoc committee of its board of directors to review its catastrophic-loss policies.
As part of the settlement, 20th Century founder Louis Foster is no longer a member of the board of directors, although he remains an honorary director emeritus, a post that carries no voting power.
Some shareholders sued 20th Century alleging that the company's management team failed to diversify its risk and buy enough reinsurance through Lloyds of London and other such carriers to protect it during a major disaster.
20th Century was severely hit by damage claims from the 1994 Northridge earthquake and estimates its final damage payout at $1 billion. The quake nearly toppled the firm, which was allowed to exit the homeowners insurance industry by the state Department of Insurance. The company has gone back to only insuring auto policies.
20th Century denied the allegations contained in the suit but said it wanted to settle the case to avoid the expense of further legal proceedings.
A hearing on the proposed settlement will be held Nov. 18 in Superior Court in Los Angeles. A judge could finalize the settlement that day.