Rising mesothelioma claims and expenses, exceeding projections. That’s the May 22, 2014 financial word from Australia’s James Hardie. An ABC News story is here. This “investors” page for James Hardie includes links to download Hardie’s May 22, 2014 press release, and KPMG’s March 31, 2014 report on expenses for the James Hardie asbestos trust.
Unlike American bankruptcy trusts, the Hardie trust also offers significant transparency as to claims and payments, as detailed below. As reported by ABC News, the gist was as follows as to asbestos claims for 2013:
“Asbestos exposures
James Hardie has reported $US195.8 million in adjustments for asbestos liabilities in its annual accounts, up from $US117.1 million last year.
The company says accounting firm KPMG’s current estimate of total asbestos liabilities for Australia, net of insurance claims, has risen to $1.547 billion this financial year from $1.345 billion last.
The main reason for the rise, according to the report, is a continued increase in claims by asbestos victims suffering mesothelioma, a rare form of cancer generally affecting the lungs and typically caused by asbestos exposure.
James Hardie says actuaries had previously assumed a peak in mesothelioma claims to have occurred in 2010-11, however the past two years of claims have been above expectations.
In the year to March 31, a total of 608 asbestos-related claims were received, a 12 per cent rise from 542 claims the previous year, and well above expectations of 540 claims.
James Hardie says 604 claims were settled in its 2014 financial year, with an average settlement of $253,000, resulting in a total payout of $140.4 million for the year.
Mesothelioma claims jumped almost 20 per cent in the year to March 31 2014, to 370, up from 309 the year before, 259 in 2011-12 and 268 in 2010-11.
KPMG had previously expected only 300 mesothelioma claims in its forecasts.
Mesothelioma claims are far more expensive for the company, with the average settlement sitting at $308,000, compared to around $100,000 for asbestosis or lung cancer.
There were also seven “large” mesothelioma claims over $1 million, worth a total of $11.6 million.
The company warns that, if claims do not start reducing until after 2018-19 the estimated claims total of more than $1.5 billion could rise a further 22 per cent on top of this financial year’s increase.
KPMG says it is too early to tell whether the higher number of claims will be sustained based on one year’s worth of increased claims.”