FACTORY COVERED FOR FIRE LOSS

COLOGNE, Germany-Kloeckner-Humboldt-Deutz A.G. is insured for an estimated 200 million DM ($139.2 million) in damage caused by a fire that destroyed two warehouses at its main manufacturing plant on Christmas Eve.

Property and business interruption coverage for the Cologne-based engineering group, which specializes in the development, manufacturing and distribution of machinery and industrial facilities, is underwritten by a consortium of insurers led by Gerling-Konzern Allgemeine Versicherungs A.G.

The fire damage could also create losses for several other companies that rely on KHD for machinery and motors in their own products. The damage is expected to hinder the delivery of some 40 million DM ($27.8 million) worth of equipment and slow KHD's introduction of a new water-cooled engine to the European market.

The fire, which broke out at 8:08 p.m., seriously damaged two warehouses and offices for 30 employees at the manufacturing facility, which is directly owned by KHD subsidiary Deutz Service International GmbH. Other production facilities at the location were not damaged. Heat from the fire forced the evacuation of streets around the manufacturing plant, but no injuries to workers or the public were reported.

Total insured losses will likely double initial estimates due to business interruption losses, according to a Gerling spokesman. Gerling representatives have examined the scene, and the spokesman said he expects property damage of about 120 million DM ($69.6 million) and business interruption losses of 80 million DM ($55.7 million). Gerling covers one-third of the company's insured property risk. The company does not have a self-insured retention.

The remainder of KHD's property insurance program is split among Allianz Versicherungs A.G., Colonia Versicherungs A.G., Haftpflicht der Deutschen Industrie VVag and Nordstern Allgemeine Versicherungs A.G.

The program is reinsured by Munich Reinsurance Co., Swiss Reinsurance Co. and Gerling's in-house reinsurer Gerling Konzern Globale Rueckversicherungs A.G. Reinsurance is expected to come into play in the loss.

German investigators are still probing the cause of the blaze but have ruled out arson.