Union Pacific 2011 Annual Report Download - page 44

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44
Our personal injury claims activity was as follows:
2011 2010 2009
Open claims, beginning balance 3,151 3,500 4,079
New claims 2,781 2,843 3,012
Settled or dismissed claims (3,063) (3,192) (3,591)
Open claims, ending balance at December 31 2,869 3,151 3,500
Asbestos – We are a defendant in a number of lawsuits in which current and former employees and
other parties allege exposure to asbestos. We assess our potential liability using a statistical analysis of
resolution costs for asbestos-related claims. 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
adjusted for inflation.
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, 2011. 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 $147 million to $159 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 2011, we also reassessed estimated insurance
recoveries. We have recognized an asset for estimated insurance recoveries at December 31, 2011 and
2010.
Our asbestos-related liability activity was as follows:
Millions 2011 2010 2009
Beginning balance $ 162 $ 174 $ 213
Accruals/(credits) (5) (1) (25)
Payments (10) (11) (14)
Ending balance at December 31 $ 147 $ 162 $ 174
Current portion, ending balance at December 31 $ 8 $ 12 $ 13
Our asbestos-related claims activity was as follows:
2011 2010 2009
Open claims, beginning balance 1,437 1,670 1,867
New claims 235 216 249
Settled or dismissed claims (381) (449) (446)
Open claims, ending balance at December 31 1,291 1,437 1,670
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
claims to be filed each year, average settlement costs, and insurance coverage issues, could cause the
actual costs and insurance recoveries to be higher or lower than the projected amounts. Estimates also
may vary in the future if strategies, activities, and outcomes of asbestos litigation materially change;
federal and state laws governing asbestos litigation increase or decrease the probability or amount of