Union Pacific 2009 Annual Report Download - page 90

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90
Our personal injury liability is discounted to present value using applicable U.S. Treasury rates.
Approximately 13% of the recorded liability related to asserted claims, and approximately 87% related to
unasserted claims at December 31, 2009. Because of the uncertainty surrounding the ultimate outcome of
personal injury claims, it is reasonably possible that future costs to settle these claims may range from
approximately $545 million to $602 million. We record an accrual at the low end of the range as no
amount of loss is more probable than any other. Our personal injury liability activity was as follows:
Millions of Dollars 2009 2008 2007
Beginning balance
$
621 $ 593 $ 631
Accruals 79 201 165
Payments (155) (173) (203)
Ending balance at December 31
$
545 $ 621 $ 593
Current portion, ending balance at December 31
$
158 $ 186 $ 204
Asbestos – We are a defendant in a number of lawsuits in which current and former employees and other
parties allege exposure to asbestos. We engage a third party with extensive experience in estimating
resolution costs for asbestos-related claims to assist us in assessing our potential liability. This liability is
updated annually and excludes future defense and processing costs. The liability for resolving both
asserted and unasserted claims was based on the following assumptions:
• The ratio of future claims by alleged disease would be consistent with historical averages.
• The number of claims filed against us will decline each year.
• The average settlement values for asserted and unasserted claims will be equivalent to historical
averages.
• The percentage of claims dismissed in the future will be equivalent to historical averages.
Our liability for asbestos-related claims is not discounted to present value due to the uncertainty
surrounding the timing of future payments. Approximately 21% of the recorded liability related to
asserted claims and approximately 79% related to unasserted claims at December 31, 2009. Because of
the uncertainty surrounding the ultimate outcome of asbestos-related claims, it is reasonably possible that
future costs to settle these claims may range from approximately $174 million to $189 million. We
record an accrual at the low end of the range as no amount of loss is more probable than any other. In
conjunction with the liability update performed in 2009, we also reassessed estimated insurance
recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2009 and
2008. Our asbestos-related liability activity was as follows:
Millions of Dollars 2009 2008 2007
Beginning balance $ 213 $ 265 $ 302
Accruals/(credits) (25) (42) (20)
Payments (14) (10) (17)
Ending balance at December 31 $ 174 $ 213 $ 265
Current portion, ending balance at December 31 $ 13 $ 12 $ 11
We believe that our estimates of liability for asbestos-related claims and insurance recoveries are
reasonable and probable. The amounts recorded for asbestos-related liabilities and related insurance
recoveries were based on currently known facts. However, future events, such as the number of new