Cyber insurance claims of Sobeys owner not finalized yet
Cyber insurance claims of Sobeys owner not finalized yet | Insurance Business Canada
Cyber
Cyber insurance claims of Sobeys owner not finalized yet
It cited ‘complexity’ in the proceedings
Cyber
By
Terry Gangcuangco
Food retailing company Empire, the name behind Sobeys, has issued an update on its cyber insurance claims as part of the firm’s latest earnings report.
The group, which experienced IT system issues in November 2022 because of a cybersecurity event, noted: “The company maintains a variety of insurance coverages, including cyber insurance. Empire is in the process of working with its insurance providers to finalize claims under its policies.
“Due to the complexity of the cyber insurance coverage and related claims, there is a time lag between the initial incurrence of costs and the recognition of anticipated insurance proceeds. While the operational impact of the cybersecurity event is behind the company, management expects that there will be insurance recoveries recognized throughout fiscal 2024.
“The financial impact of insurance recoveries on net earnings in the quarter and year-to-date ended February 3, 2024 was an expense of ($0.1) million and a recovery of $15.5 million, respectively. Impacts of the cybersecurity event, including the related insurance proceeds, are excluded from adjusted metrics.”
Empire said any additional insurance recoveries recognized throughout fiscal 2024 will continue to be excluded from its adjusted numbers.
Based on available information, Empire estimates that the final impact of the cybersecurity event on net earnings over fiscal 2023 and fiscal 2024 remains unchanged at approximately ($32.0) million, net of estimated insurance recoveries.
According to the Stellarton-headquartered firm, it immediately activated its incident response and business continuity plans, isolated the source, and implemented measures to prevent its further spread upon discovering the cybersecurity event.
The adjustment from the cybersecurity event, which management believes results in a useful economic representation of the underlying business on a comparative basis, includes the impact of incremental direct costs such as inventory shrink, hardware and software restoration costs, legal and professional fees, labour costs, and insurance recoveries.
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