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Maui windstorm and wildfires | 9 Months Ended
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Sep. 30, 2025
Unusual or Infrequent Items, or Both [Abstract] |
Maui windstorm and wildfires | Maui windstorm and wildfires On August 8, 2023, a number of brush fires in the West Maui (Lahaina) and Upcountry Maui areas caused widespread property damage, including damage to property of the Utilities, and 102 confirmed fatalities in Lahaina (the Maui windstorm and wildfires). The Maui windstorm and wildfires were fueled by extreme winds and drought-like conditions in those parts of Maui. Restoration costs and recoveries. The Utilities are continuing restoration work to rebuild portions of the electric system in Lahaina to ensure safe and reliable power to customers. Restoration efforts include the rebuilding of electrical lines along former routes in the Lahaina area with the installation of new interim steel and wood poles and electrical equipment. Ongoing work is focused on reestablishing electrical service to homes as they are being built. On December 27, 2023, the Public Utilities Commission of the State of Hawaii (PUC) issued an order authorizing deferred accounting treatment for the Utilities’ incremental non-labor expenses related to the Maui windstorm and wildfires. The deferred accounting treatment applies to certain non-labor expenses incurred from August 8, 2023 through December 31, 2024 that are not already a part of the base rates. The approval pertains only to deferred cost treatment; any cost recovery of deferred costs will be the subject of a separate application(s). On November 27, 2024, the Utilities filed a request with the PUC to extend the deferral accounting period to December 31, 2025, specifically limited to increased insurance premiums for wildfire coverage and outside services and legal costs associated with the asset-based lending facility credit agreement (see Note 5). On February 12, 2025, the PUC issued an order granting the Utilities’ request to extend. As of September 30, 2025, the Utilities have deferred $74.5 million of certain incremental costs related to the Maui windstorm and wildfires to a regulatory asset. The Utilities are actively seeking recovery of damage to covered electrical infrastructure under their property insurance programs. The Utilities have received insurance recoveries for a total of $8.6 million and nil for the nine months ended September 30, 2025 and 2024, respectively; however, the timing and amount of any future insurance recoveries remain indeterminable at this time and as such, any additional insurance receivable has not been recorded as of the date of this filing. The Company’s property insurance has a total policy limit of $500 million with a $1 million retention for damages related to Utility-owned non-generating assets, including overhead transmission and distribution assets within 1,000 feet of such assets. The Utilities believe capital expenditures related to restoration that are not covered by insurance will be managed under their current regulatory mechanisms, the recovery of which would be subject to PUC approval. As of September 30, 2025, the Company has $490.4 million of insurance coverage remaining under the property insurance policy. Third-party claims and other proceedings. Tort-related legal claims. As of October 31, 2025, HEI and the Utilities have each been named in several thousand lawsuits related to the Maui windstorm and wildfires. These civil lawsuits, including one putative class action, are pending in the Maui Circuit Court against HEI, the Utilities, and other defendants, including the County of Maui, the State of Hawaii and related state entities, private landowners and developers, and telecommunications companies (collectively, tort-related legal claims). Two putative class actions are also pending in federal court. Most of these lawsuits allege that the defendants were responsible for, and/or negligent in failing to prevent or respond to the wildfires that led to the property destruction and loss of life. Other claims include, among other things, personal injury, wrongful death, emotional distress and inverse condemnation. One lawsuit asserting similar theories and claims was filed by the County of Maui against HEI and the Utilities, one lawsuit was filed by Spectrum Oceanic, LLC against HEI and the Utilities and other defendants, and other lawsuits were filed by approximately 200 subrogation insurers against HEI, the Utilities, a private landowner, and telecommunications companies. Additional lawsuits may be filed against the Company and other defendants in the future. The plaintiffs seek to recover damages and other costs, including punitive damages. Defendants have asserted cross-claims against one another for indemnification, contribution, and subrogation. The County of Maui Origin and Cause Report, released on October 2, 2024, attaching the investigative report by the Bureau of Alcohol, Tobacco, Firearms and Explosives, estimated the total economic damage of approximately $6 billion. That estimate has not been validated by the Company, and it represents a gross number that does not take into account causation or liability and does not attempt to allocate responsibility among the various defendants. As such, the estimate is not intended to provide a reasonably possible loss in excess of the recorded amount under ASC Topic 450-20, “Loss Contingencies” attributable to the Company arising from the Maui windstorm and wildfires. On November 8, 2023, Governor Josh Green announced the One ‘Ohana Initiative (the One ‘Ohana Initiative) as a collective path forward to recovery from the Maui windstorm and wildfires. The One ‘Ohana Initiative is a new humanitarian aid fund of $175 million, with the objective to compensate, in an expedited manner, those who have lost loved ones and those who have suffered severe injuries in the Maui windstorm and wildfires. The One ‘Ohana Initiative provides an alternative to a lengthy and expensive legal process. Beneficiaries who have lost loved ones are anticipated to receive payments of $1.5 million per decedent, and those who suffered severe injuries are expected to share in a specially allocated pool of compensation. In exchange for receiving such a payment, beneficiaries will be required to waive their ability to pursue legal claims for wrongful death and severe injuries, except if they seek compensation through the litigation settlement. Hawaiian Electric fully supports this humanitarian initiative and has contributed $75 million. The Governor announced that other parties, including the State of Hawaii, the County of Maui, and Kamehameha Schools have all agreed to contribute to the fund. Hawaiian Electric’s contribution to the Initiative was less than half of the total, and Hawaiian Electric's insurance carriers funded its share of the contributions to the fund. Hawaiian Electric’s contribution is reflective of its commitment to join with community partners to provide solutions to promote Maui’s recovery. Hawaiian Electric’s commitment to contribute to the One ‘Ohana Initiative is not an admission of guilt or reflection of fault or liability related to the wildfires. The Phase I submission deadline for the One ‘Ohana Initiative passed on July 15, 2024. As contemplated by the global settlement agreement described below, the One ‘Ohana Initiative reopened for Phase II claim submission on October 23, 2025. No additional outlay by Hawaiian Electric is required to fund claims submitted in Phase II. Effective November 1, 2024, HEI and Hawaiian Electric entered into two definitive settlement agreements (collectively, the Settlement Agreements) to settle the tort-related legal claims in the litigation arising out of the Maui windstorm and wildfires (expressly excluding securities and derivative actions) on a global basis without any admission of liability. Under the Settlement Agreements, subject to certain conditions (including those described below), HEI and Hawaiian Electric, along with other defendants (the State of Hawaii, the County of Maui, Kamehameha Schools, entities affiliated with the West Maui Land Co., Hawaiian Telcom, and Spectrum/Charter Communications) have agreed to settle the claims of those who filed lawsuits in state and federal courts, or who may have claims but have not yet filed lawsuits, in connection with the Maui windstorm and wildfires. One Settlement Agreement is between the defendants, class counsel, and class plaintiffs (the Class Settlement Agreement), and the other is between the defendants and over 30 lawyers representing thousands of individual plaintiffs who have brought their own lawsuits (the Individual Settlement Agreement) or who have hired attorneys but not yet filed lawsuits. The Settlement Agreements do not resolve claims with insurers who have asserted or could assert subrogation claims in separate lawsuits and such insurers are not parties to the Settlement Agreements, but resolving such claims in the manner set forth in the Settlement Agreements (described below) is a condition that must be satisfied before any payment is due from the defendants. As part of the agreement in principle preceding the Settlement Agreements, the parties agreed to vacate all trial dates and stay the litigation, except for (i) litigation activities between the plaintiffs (individual and class) and the subrogation insurers and (ii) actions taken to further settlement. A stay remains in place and no trial dates are set in the Special Proceeding and in the subrogation actions. The Class Settlement Agreement remains subject to final court approval. A hearing on final court approval of the Class Settlement Agreement is scheduled for January 8, 2026. Both Settlement Agreements remain subject to other conditions, including those set out below. Under the Settlement Agreements, HEI and Hawaiian Electric are obligated to contribute a total of $1.99 billion (out of a total defendant contribution of approximately $4.04 billion), which includes $75 million previously contributed for the One ‘Ohana Initiative. The total settlement amount is to be divided between two settlement funds, one for the benefit of individual plaintiffs, and the other for the benefit of the class plaintiffs. HEI and Hawaiian Electric must pay such amounts in four equal annual installments of approximately $479 million, with the first installment expected to be made no sooner than early 2026. HEI and Hawaiian Electric have the option to accelerate the payments, in whole or in part, with such accelerated payments to be discounted at a rate of 5.5% per annum. HEI transferred the amount of the first payment, $479 million, into a new subsidiary, GLST1, LLC, which is restricted from disbursing such funds except in connection with the initial payment to the settlement funds. Additionally, under the Settlement Agreements, HEI and Hawaiian Electric are obligated to contribute a share to the settlement administration fees only if certain other sources are exhausted when those fees are due, for which, $3.5 million was accrued as of September 30, 2025, based on the best estimate at that time. HEI and Hawaiian Electric determined that making payments under the terms of the Settlement Agreements in four equal annual installments is the most viable option and have classified the first $479 million installment as a current liability based on expected timing of the payment and the remaining $1.44 billion as a noncurrent liability on HEI’s and the Utilities’ Condensed Consolidated Balance Sheets as of September 30, 2025. The Settlement Agreements contain no admission of any liability by HEI or the Utilities and reflect the collective efforts of the State, HEI and the Utilities, and other defendants to seek a comprehensive resolution of the litigation arising out of the Maui windstorm and wildfires. The Utilities have recorded an additional $40 million in “Accounts receivable and unbilled revenues, net” and “Other accounts receivable, net” on HEI’s and the Utilities’ Condensed Consolidated Balance Sheets, respectively, as of September 30, 2025, based on the amounts expected to be remaining under the applicable insurance policies at the time of settlement payment. The Settlement Agreements are intended to resolve all of the tort-related legal claims related to the Maui windstorm and wildfires. The Class Settlement Agreement provides releases by plaintiffs to the defendants, and among defendants, for acts and omissions relating to the Maui windstorm and wildfires. The Individual Settlement Agreement provides that individual plaintiffs who elect to accept the settlement will sign releases. The releases in the Settlement Agreements, including those among defendants (subject to certain conditions), are effective on the initial payment due date. The Settlement Agreements also provide that $500 million of the total settlement payments will be reserved and made available to defendants to defray the cost to resolve any claims brought by plaintiffs who do not release claims as part of the settlements. Defendants have the right to terminate the Settlement Agreements under certain circumstances, including if more than specified thresholds of plaintiffs choose not to participate in the settlement. The Settlement Agreements contain multiple conditions that must be met before any payment from HEI and Hawaiian Electric to the settlement funds are due. Those conditions include, among others, resolving claims of the insurers (either through agreement or a final court order stating that the insurers cannot maintain independent lawsuits against the defendants) and court approval of the Class Settlement Agreement. The Hawaii legislature passed a bill appropriating money from the State, and Governor Josh Green signed it into law on July 8, 2025, satisfying the condition related to the State’s appropriation of funds. The condition related to court approval of the Individual Settlement Agreement has also been satisfied. The Settlement Agreements do not resolve claims with insurers who have asserted subrogation claims in separate lawsuits, and such insurers are not parties to the Settlement Agreements. There are two conditions relating to such insurers that must be satisfied before payment is made under the Settlement Agreements. First, by May 19, 2025, either (a) insurers that have brought claims arising out of the Maui windstorm and wildfires enter into a written agreement that provides for releases of all claims against the defendants, or (b) that there is a final and unappealable court order providing that if the final definitive agreement between the plaintiffs and the defendants becomes effective, then those same insurers’ exclusive remedy for any claims against the defendants would be limited to asserting liens against the settlement amounts obtained by the individual plaintiffs. On February 6, 2025, after briefing was complete, the Supreme Court of Hawaii heard argument on three reserved questions regarding the scope of Hawaii subrogation law concerning the condition described in this paragraph in the manner described in (b) above. On February 10, 2025, the Hawaii Supreme Court issued an order regarding the reserved questions providing that, once the settlement becomes final, the exclusive remedy for insurers seeking to recover amounts paid to settling plaintiffs is to assert liens against their policyholders pursuant to HRS 663-10. On March 17, 2025, the Hawaii Supreme Court issued a written opinion consistent with its February 10, 2025, order. No party has sought to appeal or petition for further review to another court of the March 17, 2025, opinion or the February 10, 2025, order. This first condition under the Settlement Agreements related to the insurers has therefore been satisfied. The second condition to payment under the Settlement Agreements requires that the direct actions brought by the insurers must be dismissed in a final and unappealable order. On October 29, 2025, the defendants moved for summary judgment on the direct actions brought by the insurers. A hearing on these motions is set for November 26, 2025. On June 19, 2025, the court granted the Class Plaintiffs’ motion for preliminary approval of the Class Settlement Agreement and certified a settlement class. Pursuant to the order preliminarily approving the Class Settlement Agreement, objections to the Class Settlement Agreement were due on October 7, 2025. The only purported objection was one filed by the subrogation insurers. The deadline to opt out of the class was also October 7, 2025. On October 15, 2025, the administrator for the class settlement informed the defendants that approximately 250 unique claimants, or approximately 1% of the number of releases that were signed by the individual plaintiffs, had submitted opt out forms. Any claimant who opted out may still sign an individual settlement agreement and release and join the global settlement, and through November 3, 2025, approximately 140 of the approximately 250 opt out claimants had done so. Those who sign releases by December 6, 2025, even after opting out, will not count against the termination thresholds described above. Whether any termination threshold has been met will not be measured until on or around December 6, 2025, to provide additional time for those who opted out to sign individual settlement agreements and releases. On April 8, 2025, the subrogation plaintiffs moved to intervene into the state court class action for the purpose of objecting to preliminary approval of the state court class action settlement. On June 24, 2025, the court denied the motion to intervene. On July 24, 2025, the subrogation plaintiffs filed a notice of appeal from this order. On October 1, 2025, the class plaintiffs moved to transfer this appeal to the Hawaii Supreme Court. On October 22, 2025, the Hawaii Supreme Court ordered the transfer. The subrogation plaintiffs’ opening brief in the appeal is due on November 21, 2025. Answering briefs are due on December 31, 2025. The subrogation plaintiffs’ reply brief is due 14 days thereafter. The Hawaii Supreme Court’s briefing schedule order specified that there will be no extension of time to file any answering or reply brief. The Hawaii Supreme Court set oral argument in this appeal for January 27, 2026. On April 22, 2025, the state court overseeing the settlement with the individual plaintiffs granted the individual plaintiffs’ motion to approve the administrator to oversee the individual plaintiff settlement fund. On May 8, 2025, the individual plaintiffs moved for approval of the individual settlement plan and the Individual Settlement Agreement and release. On June 3, 2025, the court granted the motion. On May 8, 2025, defendants petitioned the state court for a good faith settlement determination for the Individual Settlement Agreement. On June 16, 2025, the court granted the motion. The Company intends to vigorously defend itself in the litigation if a definitive settlement is ultimately not achieved. There is no assurance that the Company will be successful in the defense of the litigation or that insurance will be available or adequate to fund any potential settlements, judgments, or costs associated with the litigation. If additional liabilities were to be incurred, the loss could be material to the Company’s results of operations, financial position and cash flows and could result in violations of the financial covenants in the Company’s debt agreements. If any such losses were to be sufficiently high, the Company may not have liquidity or the ability to access liquidity at levels necessary to satisfy such losses. However, any possible loss in excess of the amount recorded cannot reasonably be estimated at this time. Securities class action and shareholder lawsuits. On August 24, 2023, a putative securities class action captioned Bhangal v. Hawaiian Electric Industries, Inc., et al., No.: 3:23-cv-04332-JSC (the Securities Action) was filed in the United States District Court for the Northern District of California. The lawsuit alleges violations of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 10b-5 promulgated thereunder against HEI and Hawaiian Electric and certain of HEI’s and Hawaiian Electric’s current and former officers (collectively, Defendants), and Section 20(a) of the Exchange Act against certain current and former officers. The lawsuit broadly alleges that Defendants made materially false and misleading statements or omissions regarding our wildfire prevention and safety protocols and related matters. The lawsuit seeks unspecified monetary damages. On December 7, 2023, the court appointed Daniel Warren as lead plaintiff and Pomerantz LLP as lead plaintiff’s counsel. On March 8, 2024, the lead plaintiff filed an amended complaint. On October 15, 2024, the court granted defendants’ motion to dismiss the amended complaint, with leave to amend. On November 12, 2024, the lead plaintiff filed a second amended complaint. On March 18, 2025, Defendants filed a motion to dismiss the second amended complaint. On November 5, 2025, the parties signed a binding term sheet to settle the Securities Action (the Securities Action Term Sheet) following negotiations facilitated by a mediator. The Securities Action Term Sheet calls for the parties to prepare and execute a definitive stipulation of settlement (Securities Action Stipulation of Settlement) that will provide for the complete resolution, compromise, and settlement of the Securities Action in exchange for a payment by the Company of $47.8 million (the Securities Action Settlement Amount). The Securities Action Settlement Amount will be fully funded by the proceeds of the Derivative Settlement discussed below. The settlement of the Securities Action is conditioned on, among other things, the finalization of the Securities Action Stipulation of Settlement; approval by the boards of the Company and Hawaiian Electric of the Securities Action Stipulation of Settlement; timely funding of the Securities Action Settlement Amount; the finalization of the Derivative Stipulation of Settlement (defined and discussed below) by February 28, 2026; final court approval of the Derivative Stipulation Settlement; both preliminary and final court approval of the Securities Action Stipulation of Settlement; and entry of a judgment of dismissal following final court approval of the Securities Action Stipulation of Settlement. In connection with the settlement of the Securities Action, there will be no admission of liability by the Company or any defendants and the Company, the defendants, and related persons will receive a customary full release of all claims. In connection with the execution of the Securities Action Term Sheet, HEI accrued, as of September 30, 2025, $47.8 million, and concurrently, recorded an insurance reimbursement receivable of an equivalent amount as the recovery of the agreed settlement payment under its directors and officers liability insurance policy is deemed probable pursuant to the execution of a binding term sheet to settle all of the outstanding derivative actions described below. HEI charged the accrued settlement to “Expenses-Other” in HEI and Subsidiaries’ Condensed Consolidated Statements of Income, which was offset by the probable insurance recovery. The accrued settlement and insurance receivable is included in “Wildfire related claims” and “Accounts receivable and unbilled revenues, net,” under current liabilities and current assets, respectively, in HEI and subsidiaries’ Condensed Consolidated Balance Sheet. Two putative shareholder derivative actions were filed in the Circuit Court of the First Circuit, State of Hawaii on September 11, 2023 and on November 6, 2024, including: Rice v. Connors, et al., No. 1CCV-23-0001181 (the Rice Action) and Hamilton v. Lau, et al., No. 1CCV-24-0001595 (the Hamilton Action). On December 6, 2023, the Rice Action was removed to the United States District Court for the District of Hawaii and captioned Rice v. Connors, et al., No. 1:23-cv-00577-JAO-BMK. On March 14, 2024, the United States District Court remanded the case to the Circuit Court of the First Circuit, State of Hawaii. On March 5, 2025, upon stipulation by the parties, the court consolidated the Rice Action and the Hamilton Action under the caption In re Hawaiian Electric Industries Inc. and Hawaiian Electric Company, Inc. State Court Derivative Litigation, No. 1CCV-23-0001181 (the Hawaii State Action). On April 9, 2025, Plaintiffs filed a consolidated complaint. The Hawaii State Action is purportedly brought by shareholders on behalf of nominal defendants HEI and Hawaiian Electric against certain current and former officers and directors of HEI and Hawaiian Electric. Plaintiffs assert Hawaii state law breach of fiduciary duty, abuse of control, corporate waste, unjust enrichment, and aiding and abetting breach of fiduciary duty claims allegedly arising in connection with the Maui windstorm and wildfires that occurred in August 2023 and certain of the Company’s prior public disclosures. Plaintiffs seek, on behalf of HEI and Hawaiian Electric, compensatory and punitive damages, restitution, disgorgement, and equitable relief in the form of changes to corporate governance, policies and culture. HEI has moved to stay the proceeding pending resolution of the tort-related legal claims and the Securities Action. As discussed below, the Company and the individual defendants have reached an agreement to settle this litigation. Three putative shareholder derivative actions were filed in the United States District Court for the Northern District of California between December 26, 2023 and February 8, 2024, including: Kallaus v. Johns, et al., No. 3:23-cv-06627 (the Kallaus Action), Cole v. Johns, et al., No. 3:24-cv-00598 (the Cole Action), and Tai v. Seu, et al., No. 3:24-cv-01198 (the Tai Action). On March 19, 2024, upon stipulation by the parties, the court consolidated the Kallaus Action, the Cole Action, and the Tai Action under the caption In Re Hawaiian Electric Industries, Inc. and Hawaiian Electric Company, Inc. Derivative Litigation, No. 3:23-cv-06627 (the Consolidated Derivative Actions). On June 19, 2024, the plaintiffs filed a consolidated amended complaint. The Consolidated Derivative Actions were purportedly brought by shareholders of HEI on behalf of nominal defendants HEI and Hawaiian Electric against certain current and former officers and directors of HEI and Hawaiian Electric. The plaintiffs purported to assert both Hawaii state law and federal securities law claims. The plaintiffs asserted state law breach of fiduciary duty, corporate waste, unjust enrichment, gross mismanagement, and abuse of control claims purportedly arising in connection with the Maui windstorm and wildfires that occurred in August 2023 and certain public disclosures. The plaintiffs also asserted claims under Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and generally alleged that the Company and certain of its current and former officers made materially false and misleading statements or omissions regarding the Company’s wildfire prevention and safety protocols and related matters. Plaintiffs sought, on behalf of HEI and Hawaiian Electric, unspecified monetary and punitive damages, disgorgement, and other relief. HEI moved to stay the Consolidated Derivative Actions pending resolution of the tort-related legal claims and the Securities Action, and also moved to dismiss the consolidated amended complaint for failing to adequately allege that the Board’s refusal of the plaintiffs’ demands was wrongful. On January 30, 2025, the Court granted the plaintiffs’ request to voluntarily dismiss the case so that they could refile the action in Hawaii. As a result, the Court did not rule on the Company’s pending motion to dismiss or motion to stay. As discussed below, the Company and Defendants have reached an agreement to settle this litigation. Two putative shareholder derivative actions were filed in the United States District Court for the District of Hawaii between April 8, 2024 and June 8, 2024, including: Assad v. Seu, et al., No. 1:24-cv-00164 (the Assad Action), and Faris v. Seu, et al., No. 1:24-cv-00247 (the Faris Action). On July 3, 2024, upon stipulation by the parties, the court consolidated the Assad Action and Faris Action under the caption In Re Hawaiian Electric Industries, Inc., Stockholder Derivative Litigation, No. 1:24-cv-00164 (the Hawaii Federal Derivative Actions), and the plaintiffs filed a consolidated amended complaint on August 15, 2024. The lawsuit is purportedly brought by shareholders on behalf of nominal defendant HEI and against certain current and former officers and directors of HEI and Hawaiian Electric. The plaintiffs purport to assert Hawaii state law claims for breach of fiduciary duty, corporate waste, and unjust enrichment allegedly arising in connection with the Maui windstorm and wildfires that occurred in August 2023 and certain public disclosures. The plaintiffs generally allege that the Company and certain of its current and former officers made materially false and misleading statements or omissions regarding the Company’s wildfire prevention and safety protocols and related matters. The plaintiffs seek, on behalf of HEI, compensatory damages, restitution, disgorgement, injunctive relief, and equitable relief, including in the form of changes to HEI’s corporate governance policies and procedures. On July 30, 2024, upon HEI’s motion, the court stayed the Hawaii Federal Derivative Actions pending resolution of the motion to dismiss the Securities Action and the motions to stay and dismiss the Consolidated Derivative Actions. On March 10, 2025, HEI moved to extend the stay of the Hawaii Federal Derivative Action until resolution of HEI’s motion to dismiss the second amended complaint in the Securities Action. On April 30, 2025, the court granted HEI’s motion to extend the stay. As discussed below, the Company and Defendants have reached an agreement to settle this litigation. On November 5, 2025, the parties signed a binding term sheet (the Derivative Litigation Term Sheet) to settle all of the outstanding derivative actions described above (the Derivative Litigation Matters). The Derivative Litigation Term Sheet was signed following negotiations facilitated by a mediator. The Derivative Litigation Term Sheet calls for the parties to prepare and execute a definitive settlement agreement (the Derivative Litigation Settlement Agreement) that will provide for a complete resolution, compromise, and settlement of the claims asserted in the Derivative Litigation Matters in exchange for a payment on behalf of the individual defendants by the Company’s insurers in the amount of $100 million (the Derivative Settlement Proceeds, which is to be fully funded by the directors and officers’ liability insurance policies). The Derivative Settlement is conditioned on, among other things, timely funding of the Derivative Settlement Proceeds by the insurers; the approval by the boards of HEI and Hawaiian Electric (including their independent, non-defendant directors) of Derivative Litigation Settlement Agreement; final court approval of the Derivative Litigation Settlement Agreement; and entry of final judgment and orders of dismissal in the Derivative Litigation Matters. The plaintiffs’ counsel intends to request court approval for attorneys’ fees of 25% of the Derivative Settlement Proceeds, plus expenses not to exceed $475,000. In connection with the settlement of the Derivative Litigation Matters, there will be no admissions of liability and the defendants, and related persons will receive a customary full release of all claims. In connection with the execution of the Derivative Litigation Term Sheet, the Derivative Settlement Proceeds are to be fully funded by the Company’s directors and officers liability insurance policies. A portion of the Derivative Settlement Proceeds will be used to fund the Securities Action Settlement Amount of $47.8 million, pursuant to the executed binding term sheets, which HEI recorded as an insurance reimbursement receivable offsetting the recorded loss from the Securities Action settlement discussed above. Any remaining Derivative Settlement Proceeds in excess of the Securities Action Settlement Amount, any award in the Derivative Litigation Matters for the plaintiffs’ attorneys’ fees and expenses, and payment of other settlement related expenses provided for in the Derivative Litigation Term Sheet, is accounted for as a contingent gain which will be recognized when realized or realizable. Maui windstorm and wildfires costs. Legal costs in connection with the litigation and loss contingencies are expensed as incurred. The Company has $165 million of excess liability insurance and $25 million of miscellaneous professional liability insurance for third party claims, including claims related to wildfires, with a retention of $0.3 million and $1.0 million, respectively, and $145 million directors and officers liability insurance to cover claims related to the shareholder and derivative lawsuits, with a retention of $1.0 million. As of September 30, 2025, the Company’s and Utilities’ insurance receivable totaled $96 million and $47 million, respectively, under the policies. As of September 30, 2025, HEI and its subsidiaries have approximately $11 million, nil and $72 million of insurance coverage remaining under the excess liability, miscellaneous professional liability and directors and officers liability policies, respectively, after deducting applicable retention amounts, amounts that have been recovered under insurance policies (including the One ‘Ohana Initiative contribution), and amounts expected to be recovered for incurred costs and recognized as a receivable. See table below for the incremental expenses related to the Maui windstorm and wildfires.
|  |  | Three months ended September 30, 2025 |  | Nine months ended September 30, 2025
(in thousands) |  |  |  |  | Electric utility |  | HEI Consolidated |  | Electric utility |  | HEI Consolidated
Maui windstorm and wildfires related expenses: |  |  |  |  |  |  |  |  |  |  |
Legal expenses |  |  |  |  | $ | 4,316 |  |  | $ | 5,794 |  |  | $ | 12,469 |  |  | $ | 20,532 |
Wildfire securities-related claims |  |  |  |  | — |  |  | 47,750 |  |  | — |  |  | 47,750 |
Other expense |  |  |  |  | 5,922 |  |  | 6,290 |  |  | 19,821 |  |  | 21,113 |
Total Maui windstorm and wildfires related expenses |  |  |  |  | 10,238 |  |  | 59,834 |  |  | 32,290 |  |  | 89,395 |
Insurance recoveries 1 |  |  |  |  | (430) |  |  | (49,070) |  |  | 126 |  |  | (53,374) |
Deferral treatment approved by the PUC 2 |  |  |  |  | (6,237) |  |  | (6,237) |  |  | (21,809) |  |  | (21,809) |
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment |  |  |  |  | $ | 3,571 |  |  | $ | 4,527 |  |  | $ | 10,607 |  |  | $ | 14,212 |
| Three months ended September 30, 2024 |  | Nine months ended September 30, 2024
(in thousands) | Electric utility |  | HEI Consolidated 3 |  | Electric utility |  | HEI Consolidated 3
Maui windstorm and wildfires related expenses: |  |  |  |  |  |  |
Legal expenses | $ | 11,821 |  |  | $ | 17,205 |  |  | $ | 40,169 |  |  | $ | 56,330 |
Wildfire tort-related claims | 203,000 |  |  | 203,000 |  |  | 1,915,000 |  |  | 1,915,000 |
Other expense | 13,429 |  |  | 15,299 |  |  | 36,523 |  |  | 42,244 |
Total Maui windstorm and wildfires related expenses | 228,250 |  |  | 235,504 |  |  | 1,991,692 |  |  | 2,013,574 |
Insurance recoveries | (49,625) |  |  | (52,158) |  |  | (75,973) |  |  | (83,610) |
Deferral treatment approved by the PUC 2 | (8,589) |  |  | (8,589) |  |  | (24,143) |  |  | (24,143) |
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment | $ | 170,036 |  |  | $ | 174,757 |  |  | $ | 1,891,576 |  |  | $ | 1,905,821 |
1 HEI consolidated includes insurance recovery related to the proposed settlement of the securities class action of $47.8 million for the three and nine months ended September 30, 2025. Also includes adjustments related to costs that are no longer probable of recovery under the insurance policies. For the three and nine months ended September 30, 2025, HEI consolidated and Electric utility adjustments amount to $1.0 million and $7.6 million, respectively, of which, $0.5 million and $4.5 million were deferred to a regulatory asset, respectively, and are reported on line “Deferral treatment approved by the PUC.” 2 Related to the PUC’s order, received on December 27, 2023, approving deferred accounting treatment for the Utilities’ incremental non-labor expenses related to the August 2023 Maui windstorm and wildfires incurred through December 31, 2024. Pursuant to the PUC order received on February 12, 2025, deferral accounting treatment limited to insurance premiums and outside services and legal costs associated with the asset-based lending facility credit agreement incurred in 2025 was granted. Applicable amounts were deferred to a regulatory asset. 3 Excludes expenses related to discontinued operations amounting to $0.9 million and $1.2 million for the three and nine months ended September 30, 2024, respectively. On May 4, 2024, HEI and the Utilities reached an agreement to settle indemnification claims asserted by the State of Hawaii without any admission of fault or responsibility. Under the terms of the agreement, HEI and the Utilities agreed to contribute up to $18.4 million through the end of 2024 related to the costs of the professional advisors engaged by the State of Hawaii to advise on a variety of matters related to the Maui windstorm and wildfires. For the nine months ended September 30, 2024, a total of $14.5 million of such costs were accrued and reflected in Maui windstorm and wildfires related expenses-Other expense in the table above.

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- Definition The entire disclosure for an event or transaction that is unusual in nature or infrequent in occurrence, or both. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 220 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/220-20/tableOfContent + Details
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