BNCCorp (BNCC) has reached a settlement with its insurers more than two years after the Bismarck, N.D., company discovered that it had been defrauded by a mortgage servicer.
The $696 million-asset company said late Thursday that it would settle its claim for $7.5 million.
The company disclosed in April 2010 that it had discovered fraudulent activity by a company that was servicing BNCCorp's residential loans. The fraud contributed to a second-quarter 2010 loss of $26.2 million.
In mid-2010, BNCCorp submitted claims under it is fidelity insurance policies, which had total coverage of $15 million. The carriers, which claimed that the losses were not covered, pushed back in October 2010 by seeking a declaratory judgment against BNCCorp in federal court in Arizona. BNCCorp filed a countersuit.
BNCCorp said the settlement should contributed $5 million in income during the third quarter. Earlier this month, the company said it will be able to reverse a valuation allowanced tied to its deferred tax assets, which should create a net benefit of about $8.8 million in the third quarter.