State Farm, Mississippi settle Katrina dispute

State Farm Mutual Automobile Insurance Co. settled its lawsuit against Mississippi's attorney general over his effort to open a criminal probe into its handling of Hurricane Katrina claims, a company spokesman said.

A federal judge Thursday dismissed the case after the two sides reached a confidential agreement, said Fraser Engerman, a spokesman for the insurer.

Bloomington-based State Farm, the largest home and auto insurer in the U.S., alleged in its lawsuit that Attorney General Jim Hood reneged on a January 2007 agreement to halt his criminal investigation. Seven months later, State Farm received a grand jury subpoena from Hood requiring it to hand over new information, according to the lawsuit filed in September.

"The judge ruled that the contract with the attorney general was valid, unambiguous and enforceable," Engerman said of the year-old agreement. He declined to comment further.

Hood had no comment about a possible criminal investigation into the insurer, saying in a statement he "will continue to fight for the policyholders in Mississippi."

The 2007 accord coincided with State Farm's decision to settle civil cases in Mississippi for at least $50 million.