Facts: Rossi Inc.: Asbestos Litigation Liability: The cost of settlement and defensed costs relating to currently pending claims and future claims for losses incurred to date.
Liabilities recorded per/as at Dec 31.
Thompson (External Specialist)
Internal Actuarial Specialist
$907m, $1,184m, and $1,514m
The 2007 claim estimate is projected through 2011. The 2008 and 2009 estimate are projected through 2017.
During 2009: The reserve is reduced by payment, but no addition; Higher mesothelioma settlement amounts (Est. 29k vs Act.34K); Higher legal expenses due to: 1. More aggressive approach and use of experts (many + verdicts); 2. martin, Smith, and Jones claims; 3. higher-than-normal volume of trial activity (over 15 trails); 3. Appeal costs for Smith and Jones claims; 4. Appeal costs for certain cases (through favorable outcomes).
Expectation for 2009 litigation liability: More aggressive approach and use of both In-house and general counsel; Revised strategies to understand the claims/cases earlier; More favorable trends in settlement costs; Favorable defense costs; Disincentive of plaintiffs.
External Specialist Report: 1. Total liabilities increase by $162m because the discrepancy between actual and estimated mesothelioma settlements in 2009. 2. The estimated increase in the asbestos litigation liability model does not reflect several positive factors. 3. Pending claims should be forecast using lower settlement values for future claims because of lower quality of the older claims. (pending to quantify the older claims). 4. Thompson agrees with Rossi’s assessment to maintain the 2009 liability at $962M.
Internal actuarial specialist report: 1. The specialist reviewed Thompson’s methodologies and assumptions. 2. The specialist performed sensitivity tests using an internal asbestos model and data from Thompson’s database (none, 9, 10, 20, and 30 years): Some of scenarios