Free Expert Report - District Court of Delaware - Delaware

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Turner and Newall Inc. Projected Liabilities for Asbestos Personal Injury Claims

Mark A. Peterson Legal Analysis Systems

November 29, 2004

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Table of Contents
1. Overview of Repor t ..................................................................................................... 1 2. Dr. Peterson's Qualifications ....................................................................................... 1 3. T&N's Liability for Asbestos Claims in Tor t Litigation: U.K. and U.S. .......................... 2 3.1. Outline of Discussion of Liability Forecasts ........................................................ 2 3.2. Bases of T&N's Asbestos Liability ...................................................................... 3 4. Data for asbestos bodily injury claims involving T&N ................................................. 4 5. Estimating Liabilities for Asbestos Bodily Injury Claims .............................................. 5 6. Forecasted Tor t Liability for U.S. Claims ..................................................................... 6 6.1. Estimation of Values for Each Disease ............................................................... 8 6.1.1. General Data on Increasing U.S. Claim Values ......................................... 9 6.1.2. Past Increases in T&N Settlement Values ............................................... 11 6.1.3. T&N's U.S. Settlement Values Would Have Continued to Increase ......... 12 6.1.4. Estimating Future Increases in T&N's U.S. Settlement Values ................ 14 6.1.5. Estimating the Percent of T&N Claims that Will Be Paid .......................... 18 6.2. The Value of Pending T&N Claims in the U.S. ................................................. 19 6.2.1. Imputation for Unknown Disease Claims ................................................. 19 6.2.2. Forecasted Indemnity for U.S. Claims Pending on October 1, 2001 ........ 22 6.3. Projections of Number And Timing of Future Claims in the U.S. ...................... 23 6.3.1. The Incidence of Asbestos-Related Cancers ........................................... 24 6.3.2. Accuracy of Epidemiological Projections ................................................. 25 6.3.3. Propensities to Sue T&N in the U.S. ........................................................ 27 6.3.4. Projection of Future Nonmalignancy Claims in the U.S. .......................... 33 6.3.5. Forecasted Number of Future Claims ...................................................... 38 6.4. Estimating Liability for Forecasted Future Claims in the U.S. ........................... 38 6.5. Forecasted Total Liability for T&N's U.S. claims ............................................... 39 7. Forecasted Tor t Liability for U.K. Claims ................................................................... 7.1. Distributions of T&N's Share of Liability ........................................................... 7.2. Estimation of Values for Each Disease ............................................................. 7.3. The Value of Pending T&N Claims in the U.K. ................................................. 7.3.1. Imputation for Unknown Disease Claims ................................................. 7.3.2. Forecasted Indemnity for U.K. Claims Pending on January 1, 2002 ........ 7.4. Projections of Number And Timing of Future Claims in the U.K. ...................... 7.4.1. The Incidence of Asbestos-Related Cancers ........................................... 7.4.2. Propensities to Sue T&N in the U.K. ........................................................ 7.4.3. Projection of Future Nonmalignancy Claims in the U.K. .......................... 7.4.4. Forecasted Number of Future Claims ...................................................... 7.4.5. Estimating Liability for Forecasted Future Claims in the U.K. .................. 7.5. Forecasted Total Liability for T&N's U.K. claims ............................................... 8. Sensitivity Analyses .................................................................................................. 8.1. Sensitivity Analysis Variations .......................................................................... 8.2. Sensitivity Analysis Results .............................................................................. 8.2.1. Alternative Epidemiological Model Effects ............................................... 8.2.2. Alternative Base Period Effects ................................................................ 8.2.3. Propensity to Sue Effects ......................................................................... 42 43 43 44 45 46 47 47 48 51 51 52 53 55 55 58 58 59 60

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8.2.4. Nonmalignant Multiplier Effects ................................................................ 8.2.5. Settlement Value Effects .......................................................................... 8.2.6. Percent Payable Effects ........................................................................... 8.2.7. Discount Rate Effects ..............................................................................

60 61 62 63

9. Rule 26 Disclosures and Signature .......................................................................... 64 APPENDIX A ............................................................................................................... A-1 APPENDIX B ............................................................................................................... B-1

Figures
Figure 1: Claim Filings, 1990-2003 ................................................................................. 7 Figure 2: Annual 1990-2001 Settlement Averages for Mesothelioma ............................. 8 Figure 3: Percent of Unknown Claims by Filing Year .................................................... 20 Figure 4: Percentage Distribution of Indemnity Amounts for Pending Claims, by Disease ................................................................................................................... 23 Figure 5: Nicholson Cancer Projections ....................................................................... 25 Figure 6: Epidemiological Projections Confirmed by SEER's Mesothelioma Counts ..................................................................................................................... 26 Figure 7: Number of Cancer Filings Against T&N ......................................................... 29 Figure 8: Nicholson Meso Forecasts vs T&N Actuals ................................................... 30 Figure 9: Nicholson Meso Forecasts with Alternative T&N Projections ........................ 33 Figure 10: Annual Nonmalignant Claims ...................................................................... 34 Figure 11: Comparison of Nonmalignant and Cancer Claim Counts ............................ 35 Figure 12: Actual And Projected Filings--No Increase .................................................. 37 Figure 13: Actual And Projected Filings--Increasing ..................................................... 38 Figure 14: Percentage Distribution of PV of Total Liability, by Disease: Future Increasing Model ..................................................................................................... 41 Figure 15: Percentage Distribution of PV-Liabilities by Expense Type: Future Increasing Model ..................................................................................................... 42 Figure 16: Percentage Distribution of PV of Total Liability, by Disease: Future No-Increase Model .................................................................................................. 54 Figure 17: Percentage Distribution of PV-Liabilities by Expense Type: Future No-Increase Model .................................................................................................. 55

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Tables
Table 1a: Trends in Settlement Averages for T&N and Four Other Defendants ............ 10 Table 1b: Trends in Settlement Averages for T&N and Four Other Defendants ............ 10 Table 2: Average Settlements Among Northern California Distributors/Contractors ..... 11 Table 3: Trends in T&N U.S. Settlement Averages ........................................................ 11 Table 4: Rates of Increase in T&N Mesothelioma Settlements ..................................... 14 Table 5: Relative Settlement Averages by Disease, As Percentages of Mesothelioma Settlements ...................................................................................... 15 Table 6: Estimated T&N Settlement Averages by Disease ........................................... 15 Table 7: Scheduled TDP Values for T&N U.S. Claims .................................................. 16 Table 8: Estimated Settlement Average by Disease ..................................................... 17 Table 9: Recent Settlements by Other Defendants ....................................................... 17 Table 10: Comparison of Scheduled TDP Values for T&N and Other Defendants ....... 18 Table 11: Percent of U.S. Resolved Claims Receiving Payment: 2000-2001 Base Period ...................................................................................................................... 19 Table 12: October 1, 2001 Pending U.S. Claims ........................................................... 19 Table 13: Unknowns Are More Frequent Among Pending than Resolved Claims (U.S.) ....................................................................................................................... 20 Table 14: Transitions from Alleged to Evaluated Diseases (U.S.) ................................. 21 Table 15: Transitions from Alleged to Evaluated Diseases (U.S.) ................................. 22 Table 16: Number and Average Value of U.S. Pending Claims ..................................... 22 Table 17: Forecast of Indemnity for U.S. Pending Claims ............................................. 23 Table 18: U.S. Filings Against T&N, By Filing Year and Disease .................................. 28 Table 19: Propensities to Sue T&N, by Disease: 1992-2001 (U.S.) .............................. 31 Table 20: Number of Forecasted Claims Filed After October 1, 2001 (U.S.) ................ 38 Table 21: Forecast Indemnity for Future Claims after October 1, 2001 (U.S.) .............. 39 Table 22: Present Value (PV) of Future Claims as of October 1, 2001 (U.S.) ............... 39 Table 23: The Total Value of Pending and Future U.S. Claims Against T&N ................ 40 Table 24: The Present Value of Pending and Future U.S. Claims Against T&N ........... 40 Table 25: Trends in T&N U.K. Settlement Averages ...................................................... 44 Table 26: Forecasted Average Tor t Resolution Value for U.K. Claims: 1998-2001 Base Period ............................................................................................................. 44 Table 27: Pending U.K. Claims, 2001 ........................................................................... 45 Table 28: Disease Distributions for U.K. Claims ............................................................ 45 Table 29: Number and Average Value of Pending Claims in the U.K. ........................... 46

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Table 30: Forecast of Indemnity for Pending Claims in the U.K. ................................... 46 Table 31: Number of U.K. Filings Against T&N, By Filing Year and Disease ................ 49 Table 32: Propensities to Sue T&N, by Disease: 1992-2001 (U.K.) .............................. 50 Table 33: Number of Forecasted Future U.K. Claims ................................................... 52 Table 34: Forecast Indemnity for Future Claims after December 31, 2001 (U.K.) ........ 52 Table 35: Present Value (PV) of Future Claims as of December 31, 2001 (U.K.) ......... 52 Table 36: The Total Value of Pending and Future U.K. Claims Against T&N ................ 53 Table 37: The Present Value of Pending and Future U.K. Claims Against T&N ........... 53 Table 38: Rates of Increase in Propensities to Sue Over Five Years ............................ 56 Table 39: Alternative T&N Settlement Averages ........................................................... 57 Table 40: Alternative Percents of Payable Claims ......................................................... 58 Table 41: Comparison of Epidemiological Models ........................................................ 59 Table 42: Comparison of Base Period Effects .............................................................. 60 Table 43: Comparison of Nonmalignant Multiplier Effects ............................................ 61 Table 44: Comparison of Alternative Settlement Average Effects ................................. 62 Table 45: Comparison of Positive Payment Rates ........................................................ 62 Table 46: Comparison of Discount Rates ..................................................................... 63 Table A1: Nicholson Epidemiological Projections ........................................................ A-2 Table A2: KPMG Epidemiological Projections ............................................................. A-2 Table A3: U.S. T&N Forecasts as of October 1, 2001 ................................................. A-3 Table A4: U.K. T&N Forecasts as of January 1, 2002: No-Increase Model ................. A-4 Table A5: U.K. T&N Forecasts as of January 1, 2002: Increasing Model .................... A-5

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1. Overview of Report
This report summarizes results of analyses to estimate the liabilities of Turner and Newall (T&N) for asbestos personal injury claims in the United States (U.S.) that had been filed and were unresolved (``pending claims'') and claims that would be filed in the future (``future claims'') as of the date of its U.S. bankruptcy petition, October 1, 2001, and for asbestos personal injury claims in the United Kingdom (U.K.) that had been filed and were unresolved (``pending claims'') and claims that would be filed in the future (``future claims'') as of January 1, 2002. The report's estimates of the number of future asbestos claims and the indemnity values of T&N's pending and future asbestos claims in each country are forecast based on assumptions that extend into the future the patterns and trends of past claim filings and indemnity payments for the company in each country. These estimates are based on forecasting methods first developed in the U.S. over twenty years ago for insurance companies that have been used regularly since then to derive forecasts of asbestos liabilities and that have become a standard method for making such forecasts. As described in the next section of this report, I have used these methods in engagements for a wide range of parties and have testified in court many times as to forecasts based on these methods. The report first discusses T&N's corporate activities that led to its asbestos liabilities and discusses the data and methods used to estimate liabilities in both countries. The report then presents estimates of T&N's liability as of October 1, 2001 for pending and future claims in the U.S. Next the report presents similar estimates for T&N's liabilities in the U.K. The report then discusses alternative assumptions about matters affecting liability forecasts for T&N in each country and presents sensitivity analyses that show how the liability estimates would change with changes in key assumptions used in the estimation analyses. Based on the analyses and information described in this report, it is my opinion that the present value of liability for asbestos bodily injury claims (pending and future) is at least $11.0 billion in the U.S. as of October 1, 2001 and at least £229 million in the U.K. as of January 1, 2002 (using the year end date for U.K. claims for convenient use of the U.K. data).

2. Dr. Peterson's Qualifications
For over twenty years I have studied, written about and participated as an expert in asbestos litigation and other mass tort litigation. I am a lawyer, a graduate of Harvard Law School and a recognized scholar on asbestos and other mass tort litigation. I have a doctorate in social psychology from the University of California, Los Angeles. For over twenty years I conducted research on asbestos and other mass tort litigation as a founding member of the RAND Corporation's Institute for Civil Justice. I have published many scholarly, peer-reviewed articles on asbestos litigation, mass torts, and workers compensation including articles on how asbestos and other mass tort claims arise, how the values of asbestos bodily injury claims are determined by medical and legal issues, evaluations of claims facilities used for paying asbestos and other mass tort claims, and other subjects related to asbestos litigation. I have taught courses on mass torts at UCLA Law School and the RAND Graduate Institute. My resume is attached to this report as Exhibit 1. I am an expert on claim values, claims procedures and estimations of liabilities for fifteen asbestos trusts. I am a trustee of the Fuller Austin Settlement Trust, an asbestos trust, and a director of TSI, a nonprofit corporation that administers the trust distribution procedures for seven asbestos trusts. I have worked as an expert on asbestos litigation for judges, defendants,

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insurance companies, actuarial firms, other businesses, law firms and claimants' committees in bankruptcy. I have worked for four U.S. District and Bankruptcy Courts as the Court's expert on how asbestos claims are valued and on asbestos claims procedures and trusts. As the Special Advisor to U.S. District Court Judge Jack B. Weinstein and U.S. Bankruptcy Court Judge Burton Lifland I helped the courts and parties to restructure the Manville Trust, establishing the Manville Trust Distribution Procedures that became a model used in subsequent bankruptcy cases and by latercreated trusts to process, evaluate and pay the hundreds of thousands of asbestos claims that they have received so far. I have been an expert in more than twenty other bankruptcies and class actions in different cases working for parties with divergent interests: defendant asbestos companies, insurance companies, claimants' committees, and court-appointed representatives for future claimants. In each of these cases I have provided descriptions and quantitative forecasts of pending and future asbestos bodily injury claims using the standard forecasting methods that I describe and use in this report. I have testified in court twenty times about my forecasts of asbestos liabilities. My forecasts and analyses have been accepted and used as the court's basis for findings of aggregate asbestos liabilities in the bankruptcy proceedings of Eagle-Picher, National Gypsum, Babcock and Wilcox, Armstrong World Industries, Western Asbestos, H. K. Porter, E. J. Bartel, and Raymark. I have been recognized by courts as an expert on all areas that I address in this report and the descriptions and analyses in this report come from my scholarship and work as an expert on asbestos litigation. I have been retained by the Federal Mogul Official Committee of Asbestos Personal Injury Claimants (``ACC'') as an expert for purposes of estimating asbestos liabilities and providing testimony on those matters. This report has been prepared as part of that engagement.

3. T&N's Liability for Asbestos Claims in Tort Litigation: U.K. and U.S.
3.1. Outline of Discussion of Liability Forecasts
This section and the five that follow discuss and present results of analyses to estimate the liability of T&N for asbestos personal injury claims that had been filed and were unresolved (``pending claims'') and claims that would be filed in the future (``future claims'') as of the date of T&N's bankruptcy petition in the U.S., October 1, 2001, and January 1, 2002 in the U.K. The liability forecasts in this report for both the U.S. and U.K. are based on standard forecasting methods that have been used by many researchers over the past twenty years, on substantial data about T&N's past litigation experience, and the knowledge that I have gained from working as an expert and researcher on asbestos litigation over more than twenty years. I briefly discuss the bases of T&N's asbestos liabilities in section 3.2 and then discuss T&N's data about asbestos claims and methods used to estimate T&N's liability in Sections 4 and 5. In Section 6, I describe data on U.S. pending claims and estimates of the number of future claims that I forecast would be filed in the U.S. against T&N after October 1, 2001 and forecast T&N's U.S. tort liability applying the estimated U.S. tort litigation values described in that section. Section 7 describes similar analyses leading to the forecast of T&N's tort liability in the U.K., using U.K. data and the U.K. tort litigation values described in that section. All of these estimates of the number of future asbestos claims and the indemnity values of T&N's pending and future asbestos claims are forecast based on assumptions that extend into the future the pattern and

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trends of T&N's past claim filings and indemnity payments.

3.2. Bases of T&N's Asbestos Liability
The substantial liabilities that T&N faces in two countries, both in the U.K. and the U.S., distinguish it from other companies that have sought bankruptcy protection under U.S. law. T&N's liability in the U.S. arises from four primary sources. (1) T&N mined, processed, and sold raw asbestos fibers from the 1930s into the 1980s selling to many businesses including JohnsManville, Raybestos-Manhattan, Certainteed and Keasby & Mattison (Keasby), a T&N subsidiary. (2) Among the several T&N subsidiaries that sold asbestos products and were sued in U.S., T&N's subsidiary Keasby itself mined asbestos fibers and manufactured such a wide range of asbestos containing products that it became known as a ``mini-Manville'', likened to JohnsManville, the dominant U.S. manufacturer of asbestos-related products. Asbestos victims exposed to Keasby products sued T&N under two primary theories: T&N's sales of asbestos fibers to Keasby and T&N's alleged control and domination of Keasby. T&N owned Keasby from 1934 until Keasby's dissolution in 1962. (3) T&N manufactured Limpet, a spray-on asbestos containing insulation product from 1934 to 1974. In contrast to other spray-on insulation products, Limpet consisted mostly of asbestos fibers (64 percent), which made it both a particularly effective insulator and a particularly dangerous product. Historically most U.S. claims against T&N have involved exposures to Limpet. (4) T&N has been sued increasingly for conspiracy in suppressing information about dangers of asbestos containing products based on T&N's early and extensive knowledge about asbestos injuries among its own workers and participation in research on asbestos health issues and its actions that limited distribution of information about such dangers. T&N's unfortunate history in suppressing information about the dangers of asbestos is unusually well documented and has been summarized in a recent book published by Oxford Press (Geoffrey Tweedale, Magic Mineral to Killer Dust: Turner & Newall and the Asbestos Hazard, 2000). T&N also faced liabilities for its separate business activities and operations in the United Kingdom. As in the U.S., a substantial amount of T&N's liability in the U.K. arises from its manufacture of Limpet, a product that was used even more extensively in construction in the U.K. than in the U.S. But T&N also faced liability for a broad range of products in the U.K. where it was the dominant manufacturer of asbestos containing products, like Johns Manville in the U.S. T&N and its subsidiaries (collectively described as T&N) had extensive business operations in the U.K. that involved manufacturing and sales of asbestos containing products and raw asbestos fibers and caused many persons to be exposed to asbestos. In the U.K., T&N was sued for the asbestos injuries of employees of T&N, employees of other companies who were exposed to asbestos at work by T&N's asbestos products or business operations, and others who worked or lived in the vicinity of places where T&N asbestos products were manufactured or used. Plaintiffs who assert claims against T&N typically allege one or more of a standard set of asbestos related injuries. These include three groups of cancers all of which have been shown to be caused by exposures to asbestos: malignant mesothelioma, a rare cancer of the pleural tissue surrounding the lungs and that separates the abdominal and chest cavities, whose only known cause is from exposure to asbestos; lung cancer; and several gastrointestinal cancers. A substantial majority of plaintiffs claimed a nonmalignant disease: either asbestosis, a disease characterized by scarring and fibrosis of the lung tissue, or pleural disease, involving scarring of the pleura resulting in pleural plaques or pleural thickening. In each country settlement values differed among these diseases: T&N's settlement payments were greatest for mesothelioma and lowest for nonmaligant claims. The relative frequency of each type of disease and amounts paid by T&N to resolve claims differed between the two countries contributing to the different liability forecasts for each country.

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Asbestos liabilities in the U.K. are considerably smaller than in the U.S. for several reasons. First, far fewer claims have been filed in the U.K. than in the U.S. Second, while T&N paid substantial amounts on average to resolve asbestos claims in each country, T&N has paid more on average to resolve asbestos claims in the U.S. for each of the asbestos related diseases. Third, settlement averages in the U.K. have not been increasing as in the U.S. and are not subject to the same pressures toward future increases as we see in the U.S. In the U.S., T&N has been one of many asbestos defendants each of whom contributed only a small fraction to plaintiff's compensation under U.S. laws governing joint tortfeasors' responsibilities to injured persons. After the collapse of CCR and bankruptcies of other defendants, who had paid larger indemnity shares, T&N faced a growing share of the total asbestos liabilities. In the U.K., unlike the U.S., T&N has always been the primary ``target'' defendant paying the entire or almost the entire amount of money received by many of the asbestos plaintiffs. The possible insolvencies of other U.K. defendants would not have the same impact on future T&N payments as in the U.S. Until 2001 T&N addressed and defended U.S. law suits as a member of the Center for Claims Resolution (``CCR'') a consortium of asbestos defendants created in 1988 to replace a previous consortium, the Asbestos Claims Facility (``ACF''). Both organizations were formed by defendants for purposes of achieving more favorable settlements and reducing defense and administrative expenses. Because the members of CCR accounted for substantial portions of all recoveries that plaintiffs might expect to receive for their injuries, CCR members were able to obtain more favorable settlement terms by negotiating jointly than individual defendants could have standing alone. Wielding this joint power, CCR refused to enter into settlement discussions until claims were ready for trial or else entered into group settlements with plaintiffs' law firms on terms favorable to CCR members. These group settlements controlled the flow of claim payments, capped annual amounts that would be paid, and imposed criteria that plaintiffs were required to satisfy to receive payment, criteria that were stricter than members could have required outside of CCR. These group settlement agreements reduced the total indemnity payments to plaintiffs by CCR members, including T&N, and also allowed CCR members to limit their defense and administrative costs. The CCR membership also involved a limited joint subsidization in which every CCR member who was named in a law suit would contribute to settlement of the suit pursuant to a complex formula agreed to by the CCR members. T&N benefited especially from its CCR membership. Plaintiff lawyers had strong incentives to take the substantial combined offers that CCR could make on behalf of its twenty members, which dampened their interest in undertaking the discovery and preparation that would have lead to substantial verdicts against T&N, given the corporate history documented by Tweedale's 2000 book. Instead, T&N was able to maintain relative obscurity as a small member among the twenty companies in CCR.

4. Data for asbestos bodily injury claims involving T&N
We received separate asbestos claims databases for the U.K. and the U.S. that we used to make the forecasts in this report. The U.K. database was created by T&N and used by it in its administration and defense of asbestos claims in that country. Data in the U.S. claims database were drawn primarily from a common database that the CCR maintained for all law suits filed against any member. This CCR database included detailed information about plaintiffs, their claims against CCR members, litigation events, indemnity costs and other matters useful in estimating T&N's liability for pending and future claims. When it left CCR, Federal Mogul obtained extracts of data for each of its entities that were CCR members, including an extract for T&N claims, and then continued to maintain and add to these databases until Federal Mogul's October 1, 2001 bankruptcy petition date. My company, Legal Analysis Systems (LAS), received

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two different extracts of data involving U.S. T&N claims. These data bases were produced at different times: (1) December 26, 2001 (2) February 6, 2003. We received one database of T&N's asbestos claims in the U.K. in September 2002. The database appears to provide complete data through year 2000 and somewhat incomplete data for 2001. We received limited supplemental data on November 24, 2004 for approximately 4,000 claims that had been filed against T&N prior to the October 1, 2001 petition date but that had not previously been included in either data base listed above. We did not use this supplemental data for our forecasts in this report. Because the supplemental data identifies additional recently filed claims, the additional data would have slightly increased our forecasts, but would not have produced material changes. To my knowledge experts for parties to the insolvency proceedings in both the U.K. and U.S. have access to all of the data that we have used for analyses and forecasts in this witness statement. Like LAS, those experts also have access to representatives of T&N both in the U.K. and in the U.S. to discuss any questions about the company's asbestos experiences and liabilities in either country and to request further data or information about such liabilities. Legal Analysis Systems prepared copies of each of these databases which were sent to the law firm Caplin and Drysdale who in turn sent the database to experts working for parties in the U.K.

5. Estimating Liabilities for Asbestos Bodily Injury Claims
Forecasts of asbestos liabilities are needed and have become commonplace in many different circumstances. Asbestos defendants estimate their present and likely future liabilities both for their own corporate planning and also as part of financial reporting. Insurance companies forecast asbestos liabilities to create reserves for specific insureds. Insurance rating organizations forecast liabilities of insurance companies. Financial analysts forecast liabilities of specific asbestos defendants and insurance companies. Businesses forecast liabilities of other companies that face asbestos liabilities in order to determine whether or not to engage in business activities with the companies that face such liabilities. Asbestos trusts are required to forecast their liabilities in order to determine how much money must be reserved for future claimants and what amount can be paid to claimants with presently pending claims, forecasts that are required by the U.S. Bankruptcy Code. Parties to bankruptcy proceedings forecast liabilities in order to draft reorganization plans and disclosure statements. Bankruptcy courts estimate the asbestos liabilities of debtors. Other courts estimate the asbestos liabilities of particular defendants in the course of class action, insurance coverage or other litigation. These forecasts have been done in many ways, with highly varying quality and credibility. Credible forecasts of an asbestos defendant's liability must look together at several sources of information. First, forecasts must draw upon data about the defendant's past and current experience with asbestos claims--counts of claim filings, distributions of asbestos diseases, resolutions of claims both with and without payment, trends for all of these elements of liability. Next, the forecast should consider developments and the state of asbestos litigation at the time of the forecast and reasonable expectations about future developments. Then the forecast must reflect the epidemiology of asbestos related diseases, trends in the incidence of asbestos related disease both past trends and reasonable forecasts of future trends as well as expected trends in filings of claims for those diseases and trends in the amounts paid to indemnify those claimants. The forecasts in this report are based on all of these sources.

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T&N's asbestos liability is a sum of its liability for pending claims, its liability for future claims and its costs for administering and defending those claims. I do not estimate its costs for administering and defending asbestos claims in this report, but T&N's costs would have been considerable. Typically in the U.S. defense and administrative costs can add as much as 50 percent to indemnity costs to as much as doubling indemnity costs. T&N's defense and administrative costs would have been far greater after it left CCR in January 2001. The following formula is the basis for estimating the total indemnity that T&N would pay to resolve these claims: Number of Claims x Average Resolution Cost = Forecast Indemnity Here, counts of pending claims are drawn from T&N's databases. I forecast counts of future claims by drawing upon T&N's claims databases, epidemiological forecasts of the number of asbestos related cancer deaths and my knowledge about the asbestos litigation environment. Estimates of average resolution costs are based on T&N's historic experience in resolving claims and in the U.S. recent events that will change this history. Derivations of these cost estimates are described in Section 6.1 of this report for U.S. claims and in Section 7.2 of this report for U.K. claims. For better precision, the formula above should be carried out separately for each asbestos disease. For T&N in both the U.K. and U.S. and for every asbestos defendant, settlement values and resolution costs vary among different asbestos related diseases (Table 1, below). T&N paid far more on average to resolve mesothelioma claims than any other disease. Resolution costs differed among all other diseases.

6. Forecasted Tort Liability for U.S. Claims
Like other major asbestos defendants in the U.S., T&N saw substantial increases in the most recent years both in the number of new asbestos claims that it faced (Figure 1) and in the amount that it had to pay to resolve asbestos claims, particularly for cancers (Figure 2). Together, these trends were dire for asbestos defendants, leading to bankruptcy filings for each defendant shown in these Figures (Manville filed in 1982, but all others filed in 2000 or 2001). And among these major defendants, T&N faced far sharper rates of increases in claim filings. In the most recent years, since 1998, filings against T&N averaged over 40,000 asbestos law suits per year, a rate comparable to other major asbestos defendants. Before that period, T&N averaged far fewer claims than other major asbestos defendants, under 20,000 in every year. Only in recent years have plaintiffs' lawyers come to focus on T&N as a particularly culpable asbestos manufacturer that had potentially broad liability exposure to many injured workers (see Tweedale, 2000).

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Figure 1: Claim Filings, 1990-2003
100000

Number of Claims

20000

40000

60000

80000

T&N Armstrong B&W OC Manville

1990

1992

1994

1996 Filing Year

1998

2000

2002

Note: Entries are annualized for bankruptcy year. Similarly, while each of these major asbestos defendants paid increasingly large amounts to settle asbestos claims in recent years, increases in mesothelioma settlements have continued to be sharper for T&N. As Figure 2 shows, through year 2000 the amounts paid by T&N and Armstrong to settle mesothelioma claims increased at comparable rates as members of the defendant consortium the Center for Claims Resolution, with sharp increases for both in 2000. T&N's mesothelioma settlements increased even more sharply through the first nine months of 2001 after T&N left the CCR.

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Figure 2: Annual 1990-2001 Settlement Averages for Mesothelioma

200000

Average Settle

0

50000

100000

150000

T&N Armstrong B&W OC PHA

1990

1992

1994

1996 Settle Year

1998

2000

6.1. Estimation of Values for Each Disease
Determinations of the amounts that T&N would have to pay to resolve current and future claims as of October 2001 are complicated, because T&N now faces a changed litigation environment that was more dangerous and more costly than the environment in which it had settled past claims. T&N suffered three potentially catastrophic developments in the months before its bankruptcy filing. First, in 2000 (in 2001 for the paperback) the Oxford Press published a damning expose of T&N's asbestos history (Geoffrey Tweedale, Magic Mineral to Killer Dust: Turner & Newall and the Asbestos Hazard) that drew attention to the company and, in effect, laid out the case for large compensatory and punitive verdicts and sharply increased settlements. Second, after the collapse of the Center for Claims Resolution (CCR) in early 2001 T&N lost the obscurity that it had been able to maintain as one of twenty members of that defense consortium. The timing of these two events would have been costly to T&N: just as its culpability and liability had become prominent, it lost the protections of CCR membership where it had been a relatively insignificant one of twenty members. Third, T&N's now heightened visibility and exposure to liability coincided with the 2000-2001 bankruptcy filings by seven other major asbestos defendants. Again the timing was bad for T&N: Just as plaintiffs lost the last of their target defendants T&N had now become a highly visible and available target. These increased pressures are shown in T&N's claims database by the sharp increases in claim filings in 2000 and even sharper increases in 2001 (Figure 1) and by its sharply increased settlement costs for mesothelioma claims (Figure 2). After leaving CCR, T&N began immediately to pay far greater amounts to settle mesothelioma claims, because the expedited trial settings given to mesothelioma victims exposed T&N to early trials where it would have been an

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individual defendant burdened by devastating corporate history and documents. Even within the eight months between T&N's exit from CCR and its bankruptcy petition, mesothelioma plaintiffs began looking to T&N as a source to replace compensation lost through the bankruptcy filings of previous target defendants. But we have not yet seen data showing how these pressures would have affected T&N's settlements of other claims. Most settlements reported in T&N's database had been made when it was a member of the CCR, settlements which predated and insulated T&N from effects of the catastrophic developments of 2000 and 2001. After it left CCR during the eight months before its bankruptcy petition T&N did not face trial pressures for claims of other asbestos-related diseases and, therefore, did not yet face increased settlement pressures for those claims. T&N mostly stopped settling lung cancer or other cancer claims after leaving CCR, settling during 2001 only 18 percent of the number of lung cancers and only 11 percent of the number of other cancers that it settled in 2000. Similarly, T&N settled few nonmalignant claims during 2001 other than those claims carried over from CCR that T&N selected as having likely difficulty in establishing exposure to T&N. T&N's claims database is useful for forecasting the values that the company would now have to pay to resolve asbestos claims, showing the increasing trend in mesothelioma settlements during T&N's last year in the CCR and the further increase during the eight months after it left CCR. However, T&N's data are not sufficient by themselves. To forecast the trends and values of T&N settlements for other asbestos-related diseases, we look to both T&N's data on its trends for mesothelioma settlements and settlement data from other asbestos defendants. 6.1.1. General Data on Increasing U.S. Claim Values The following tables shows annual settlement averages for T&N and four other asbestos defendants all of whom also sought bankruptcy protection since 2000: Armstrong, Babcock and Wilcox, Owens Corning and Porter Hayden. This table has two implications important to forecasting T&N's future asbestos liabilities. First it demonstrates the consistent general trend of increasing settlements by asbestos defendants. As shown by the trends for all five defendants, asbestos settlement values have increased in the U.S. since the early 1990s. Second, the table also demonstrates how CCR membership had limited the amounts that its members, here Armstrong and T&N, had to pay to resolve asbestos claims and dampened the trends of increasing settlement amounts. CCR member Armstrong has always been a significant defendant with one of the largest CCR shares. T&N has now become a significant defendant, but only after CCR ceased to operate. The settlement amounts paid by these two CCR members have been consistently less than settlements by the other three defendants listed in Table 1, even though neither Babcock & Wilcox nor Porter Hayden was a prominent asbestos defendant. Porter Hayden, which is a distributor and installer of asbestos products in the mid-Atlantic states that has always been a secondary source of payments to asbestos plaintiffs, nevertheless paid substantially larger settlements than T&N for each asbestos-related disease. Mesothelioma settlements by Porter Hayden reached or exceeded $150,000 in two of the last three years before its bankruptcy petition. Among the three non-CCR members in Table 1 only Owens Corning's is regarded as a target defendant. In the past Owen Corning's settlements have been much greater than T&N's, but this difference has been closing (Figure 2) and the size of Owens Corning's settlements now provide a measure of what T&N's future settlement are likely to become. Given the T&N corporate history documented by Tweedale, T&N's future tort settlements would have been soon likely to equal or surpass Owens Corning's.

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Table 1a: Trends in Settlement Averages for T&N and Four Other Defendants
Meso Year T&N OC PHA $7,300 5,819 108,702 9,950 67,245 65,204 71,496 91,762 85,990 178,358 103,537 149,008 AWI B&W T&N OC Lung PHA $1,985 23,989 10,156 9,149 13,895 9,210 8,476 16,962 17,101 55,742 20,231 26,022 AWI $5,346 9,154 13,347 11,406 10,880 12,152 11,080 13,201 12,458 12,272 17,619 B&W $5,533 6,684 7,760 15,406 14,534 18,738 20,332 23,078 27,431 23,046 28,036

1990 $72,937 1991 96,911 1992 $25,355 95,687 1993 32,048 85,905 1994 34,119 76,373 1995 37,785 93,663 1996 42,580 128,159 1997 43,635 164,493 1998 46,608 159,445 1999 60,936 192,476 2000 86,606 211,304 2001 138,939

$10,412 $10,272 $28,549 21,072 12,106 35,692 25,643 20,878 $14,440 37,787 27,452 37,136 10,808 37,222 28,092 45,280 9,104 30,815 32,270 58,201 14,009 31,696 35,810 58,279 9,734 29,790 41,808 64,896 14,033 29,241 47,316 68,531 12,425 36,416 56,012 78,853 12,179 49,635 96,760 79,930 14,350 49,116 18,956

Table 1b: Trends in Settlement Averages for T&N and Four Other Defendants
Other Cancer Year T&N OC PHA $2,059 158 4,851 9,696 4,541 3,503 19,391 6,834 9,150 10,189 10,609 11,488 AWI $2,760 4,188 8,072 5,217 5,651 7,325 6,079 6,942 5,662 6,214 7,395 B&W $4,980 5,797 5,175 10,297 10,978 12,271 14,154 12,054 16,986 13,632 12,618 T&N Nonmalignant OC $11,390 9,687 12,153 11,266 10,032 7,403 10,418 10,332 10,121 7,041 6,699 PHA $3,110 576 3,259 2,908 2,994 2,602 4,046 5,417 4,221 4,371 6,066 7,665 AWI 1,582 2,441 4,146 2,913 2,817 2,878 3,493 3,953 1,908 3,327 4,246 B&W $3,343 3,553 3,653 4,472 4,491 4,993 5,227 4,804 5,547 6,779 5,037

1990 $16,380 1991 15,061 1992 $10,165 18,330 1993 5,099 17,140 1994 4,978 18,488 1995 6,984 15,408 1996 5,182 14,938 1997 6,241 12,024 1998 5,744 15,864 1999 5,792 21,839 2000 6,395 15,521 2001 4,590

$3,891 3,383 2,501 2,865 3,144 5,008 2,446 3,085 3,227 1,296

Note: Indemnity payments averaged across all resolved claims including claims resolved without payment. Payments are adjusted for inflation using actual historic CPI and stated in year 2001 dollars. From publicly available data. Owens Corning (OC) entries exclude verdicts. PHA is Porter-Hayden; AWI is Armstrong World Industries; B&W is Babcock and Wilcox. T&N settlements among claims filed in 1992 or later. The general pressures on asbestos defendants to increase asbestos settlement values reflected in Table 1 increased further after 2000 with a series of important events: (a) eight asbestos defendants who were paying the largest shares of compensation to asbestos plaintiffs filed for bankruptcy protection between February 2000 and October 2001 and (b) in January 2001 the CCR dissolved removing the single source of largest payments being received by U.S. asbestos plaintiffs. Together these events eliminated sources providing most of the money paid to asbestos victims in the U.S. With these losses of compensation, plaintiffs then looked to remaining asbestos defendants to make up the lost compensation. Plaintiffs increased their demands on defendants who remained in the litigation and forced increases in settlements among those defendants. These effects of the 2000-2001 bankruptcies and CCR's dissolution have been

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broadly recognized and noted by asbestos defendants, lawyers and other commentators on U.S. asbestos litigation. Table 2 shows representative increases among a group of California distributors and installers of asbestos insulation since 2000. T&N similarly would have faced these pressures and increases in tort litigation and reasonable forecasts of its future asbestos liabilities must assume increasing settlement values that T&N would have had to pay to resolve its pending and future claims in the tort system.

Table 2: Average Settlements Among Northern California Distributors/Contractors
Disease Year 1998 1999 2000 2001 2002 Meso $134,953 152,782 155,938 223,622 327,992 Lung $2,226 31,291 53,310 49,707 135,810 Othc 12,917 17,296 9,901 145,601 Nonm $8,626 15,658 13,933 16,321 12,377

Note: Average settlements for AC&S, E.J.Bartels, Thorpe, and Metalclad with plaintiffs represented by three law firms (Kazan, McClain, Edises, Abrams, Fernandez, Lyons and Farrise; Brayton Purcell; The Wartnick Law Firm) that represent most Northern California plaintiffs. Payments are adjusted for inflation and stated as 2001 dollars. Settlements of less than $500 (in then current dollars) were deleted. 6.1.2. Past Increases in T&N Settlement Values T&N's data confirm that its past settlements in the U.S. increased in value along with most other asbestos defendants. As Table 3 shows, the T&N settlements in the U.S. increased between 1998 and 2000 for all diseases. During those years T&N was a member of the CCR which provided defense, administration and settlement of T&N's claims in common with other CCR members.

Table 3: Trends in T&N U.S. Settlement Averages
Period CCR-Yrs CCR-Yrs CCR-Yrs Post-CCR SetYr Meso Lung Othc $5,744 5,792 6,395 4,590 Nonm $2,446 3,085 3,227 1,296

1998 $46,608 $12,425 1999 60,936 12,179 2000 86,606 14,350 2001 138,939 18,956

Note: Average settlement amounts are expressed in year 2001 dollars. CCR's dissolution in January 2001 changed T&N's position in litigating and settling asbestos claims and increased the amounts that it had would have to pay to settle cases. These changes are partially reflected in T&N's settlement averages in the nine months of 2001 before it filed for bankruptcy protection when T&N's average settlements for both mesothelioma and lung cancer increased with great increases for mesothelioma.

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6.1.3. T&N's U.S. Settlement Values Would Have Continued to Increase T&N's settlements began to increase for mesothelioma in 2001 and would have continued to increase among all diseases had the company not filed for bankruptcy protection in October 2001. As a result, its liability after September 2001 was greater than would be reflected by its data on past settlements. Six important factors drive the continuing increase in settlement values of U.S. asbestos claims against T&N and require that its historic settlement data be adjusted to reflect these increasing settlement values. First, T&N's former membership in CCR had provided it with substantial savings in both defense and indemnity costs that T&N lost when CCR dissolved. CCR provided tactical advantages that would be unavailable to T&N outside of CCR. As the largest provider of settlement dollars CCR was able to extract favorable settlements for its members. Plaintiffs' law firms were willing to give CCR favorable settlements in return for the large, collective CCR payments. Moreover, CCR settled asbestos claims in large groups saving plaintiffs' law firms transaction costs and generating large total payments to the firms and their clients. With CCR's dissolution T&N instead had to settle asbestos cases on its own without CCR's tactical advantages in negotiating favorable settlements. T&N's 2001 settlements reflect the beginnings of these increases. Other former CCR members have experienced even greater increases than T&N had during the limited time between the end of CCR and T&N's bankruptcy ten months later. Second, T&N had been able to hide from litigation scrutiny as a CCR member. T&N had an unfortunate history with its asbestos products and activities that could have produced large adverse verdicts and large settlements. But it was protected as a CCR member. Plaintiffs' law firms were content to get the relatively large payments that CCR provided rather than working up and trying cases against individual CCR members. In any event, CCR would not have negotiated separate T&N settlements. Plaintiffs' lawyers had to settle T&N claims when they settled with CCR so law firms would not extract the separate value created by T&N's sordid history. T&N lost this obscurity with the publication of Tweedale expose and with the collapse of the CCR. Third, the historic settlements in T&N's database had all occurred before the spate of 2000-2001 bankruptcies had fully affected its asbestos liabilities. If T&N had continued in tort litigation (which must be assumed in determining its asbestos liabilities within its bankruptcy), it would have paid more in the future simply because all the other big payers had gone into bankruptcy. This effect is widely recognized. The increased focus on T&N as a remaining defendant would have been exacerbated by T&N's inflammatory history. T&N would have been the particular target for plaintiffs and its values would have increased more after the 2000-2001 bankruptcies than would have values for other defendants. Fourth, all three of these specific causes of increasing claims -- CCR's dissolution, T&N's inflammatory history with asbestos, bankruptcies of eight primary defendants -- are superimposed on the broad increases in asbestos settlements that had been occurring for ten years, that showed no signs of abating in 2001 and that continue today. We would have had to forecast continuing increases in T&N's settlement values in the U.S. even without the powerful effects of these three specific causes. Two final technical matters involve CCR's practices in settling and allocating claim payments among its members. CCR's practices in allocating indemnity payments among its members makes CCR data about T&N's settlement values claims inappropriate for forecasting future payments by T&N outside CCR, unless analyses of the data are adjusted. CCR had a policy of ``cross-subsidization'' in which all members who were named in a law suit paid into the settlement of that claim whether or not there was evidence of exposure to the products of that member. CCR required that a plaintiff establish evidence of exposure for only one CCR member; evidence of responsibility of one CCR member triggered CCR's agreement to pay the claim.

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CCR chose not to require evidence of exposures to products of every CCR member that a claimant named in his/her law suit, because CCR did not want to undertake an expensive and internally divisive determination and than assess evidence about the relative responsibility among its members. As a result of this policy, T&N paid more claimants compared to the number it would have paid outside CCR, i.e. claims where T&N was named in a law suit but the plaintiff would have no evidence of T&N's liability. But in turn T&N paid less on average to each settled claim, because other members contributed to the settlement of claims where T&N would have liability even in cases where those other members would have paid nothing outside of this CCR arrangement. CCR members assumed that this cross subsidization policy netted out, reflecting approximately what each member would have paid had contribution issues been thoroughly pursued, but it resulted in every member paying lower average amounts in more claims than would have happened outside CCR. For T&N this means that the CCR data overestimates the percent of claims in which T&N would pay settlements, but underestimates the averages when they did pay. We take both of these limitations of CCR data into account in forecasting T&N's future liability for asbestos claims. As a final, technical matter, most of T&N's settlements as a CCR member were group settlements in which CCR agreed with plaintiffs' law firms to pay modest amounts of money to a large group of plaintiffs represented by the firm based on submission of required, but limited disease and exposure evidence. If CCR had instead conducted individual negotiations and discovery for each claim covered by group settlements, it would likely have refused to pay some claims that it paid through these group settlements, but with the policy of group settlements CCR members again concluded that the group process approximated or lessened what they would have to pay in indemnity while lessening defense costs and risks of being taken to trial. Indeed, CCR did not offer these group settlements for all claims or all law firms. When CCR instead settled claims individually (so called ``trial ready'' cases), CCR and plaintiffs each spent more in the settlement process, in discovery and in providing and reviewing more extensive documentation and CCR also gave up its tactical advantages of group settlements. For both reasons CCR had to pay much more for each of these ``trial ready'' settlements. Unlike claims resolved through group settlements, these ``trial ready'' claims were reviewed and paid individually and claimants had to provide the more extensive documentation that is involved with preparing for trial, so that claimants demanded and received more money for ``trial ready'' claims. The CCR data clearly demonstrate these differences in value. During its nine months of settlements after it left CCR, T&N carried on and actually expanded this group settlement policy as an individual defendant paying many claims at values lower than CCR had. In 2001, seventy percent of T&N's settlements of asbestosis and pleural claims (10,000 claims) were for $300 or $400 or less. T&N settled few other cancer claims in 2001, only 49, but many of these were also for small amounts, thirty percent for $600 or less. T&N's defense counsel described its settlement practices for these cases as clearing out CCR-era claimants who would have had difficulty establishing exposure to T&N. To plaintiffs' lawyers who foresaw a high likelihood that T&N would file bankruptcy even these low payments were attractive, since T&N's bankruptcy would result in even lower pro rata payments to plaintiffs (because trusts do not pay 100 percent of claims' values) that would be paid only after many years of delay. Small payments before the bankruptcy were better than even smaller payments years later. Because of the expanded use of these group settlements, T&N's average settlement values decreased for nonmalignant and other cancer claims in 2001, even while settlement values increased for claims that were resolved individually (Table 3). This was a transitory pattern reflecting T&N's attempt to resolve the many claims that had built up in CCR and the suppression of values in anticipation of T&N's bankruptcy filing later in 2001.

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6.1.4. Estimating Future Increases in T&N's U.S. Settlement Values For all these reasons, T&N would have had to pay more to resolve claims in U.S. tort litigation than it had in the past as a CCR member. Because it filed for bankruptcy protection, we need to forecast how much these settlement values would have increased after September 2001. We use T&N's historic settlement data to estimate likely future settlement values for mesothelioma claims. By 2001, during its first months after leaving CCR, T&N's average mesothelioma settlement had reached $138,939 which was 160 percent of its average settlement in 2000 and 318 percent of its settlement in 1997 (Table 4). T&N's settlements for mesothelioma claims would have continued to increase further since its 2001 settlements represent its experience during only the first eight months after leaving CCR and given all of the reasons to expect increases discussed above. We derived a conservative estimate of the likely future rate of increase in T&N's mesothelioma settlements based on the company's past experience and data over the years 1997 through 2001. T&N's data show that T&N's average mesothelioma settlement during 2000 and 2001, $98,267 (weighted for the number of settlements in each year), was 214 percent of its $45,974 (weighted) settlement average three years earlier during 1997 and 1998 ($98,267 / $45,974 = 2.14). We use this as our estimate of the amount by which T&N's mesothelioma settlement values would increase in future years, multiplying this 214 percent rate times $98,267, T&N's average mesothelioma settlements during 2000 and 2001. We use the product of this calculation, $210,291 as our estimate of the average value of mesothelioma settlements by T&N for our forecast. This calculation is conservative in two ways: First it calculates the rate of T&N's historic rate of increase not to the $138,939 that it paid in 2001 but rather to the lower $98,267 weighted averages of its mesothelioma settlements during 2000 and 2001 period; second, it multiplies this conservative rate of increase times the 2000-2001 average of $98,267 rather than the $138,939 that T&N was actually paying after it left CCR.

Table 4: Rates of Increase in T&N Mesothelioma Settlements
Average Meso Payment $43,635 46,608 60,936 86,606 138,939 Percent Changes 1-Year Cumulative NA 107% 131 142 160 NA 107% 140 198 318

Period CCR-Yrs CCR-Yrs CCR-Yrs CCR-Yrs Post-CCR

SetYr 1997 1998 1999 2000 2001

Note: Average settlement amounts are expressed in year 2001 dollars. We then used this conservative $210,291 estimate of the current settlement value of T&N mesothelioma claims to estimate the settlement values for other diseases, using also data from other asbestos defendants about the relative size of settlements for the various asbestos-related diseases. There are consistent patterns about the relative size of settlements across the various disease that have been used both by experts and courts to understand the values of claims for various diseases. Among all defendants, including T&N, there is a common order to the size of settlements: mesotheliomas are greatest, then lung cancer, other cancers and nonmalignancy claims. In recent years mesothelioma settlements are typically about 20 times the settlement amounts of nonmalignant claims, about 4 times lung cancer settlements and about 10 times settlements for other cancer claims, although these ratios vary somewhat from defendant to

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defendant. Table 5 shows ratios for eight defendants, the amounts of mesothelioma settlements relative to settlements for each of the other three disease categories, with all settlements occurring during 1998 to 2000. Table 5 comes from a document that I prepared as an expert for Judges Jack B. Weinstein and Burton Lifland in 2001 hearings involving the Manville Trust's Trust Distribution Procedures. The document is attached to this report as Appendix B.

Table 5: Relative Settlement Averages by Disease, As Percentages of Mesothelioma Settlements
Defendant B&W OC Def 1 Def 2 Def 3 Def 4 Def 5 Def 6 Lung 33.6% 21.5 28.2 26.8 25.1 20.7 21.1 19.2 Othc 19.5% 8.3 14.1 13.4 11.6 9.0 9.9 7.4 Nonm 7.8% 3.3 6.7 6.4 5.0 4.5 4.5 3.4

Note: 1998-2000 settlements for eight defendants. From document submitted and entered into the record of Findlay v. Falise, U.S. District Courts for the Eastern and Southern District of NY. Identities for six of 8 defendants are confidential. We used the ratios from Table 5 for Babcock & Wilcox and Owens Corning to estimate the current T&N settlement values for each asbestos related disease. We used our $210,291 estimate of the settlement value for mesothelioma claims against T&N and then calculated values for each other disease as a percent of this mesothelioma average. Table 6 shows the resulting estimates of the values for each disease using the ratios for B&W and OC and also shows a third calculation based on the typical ratios discussed above, which are within the ranges shown in Table 5 and represent midpoints across defendants.

Table 6: Estimated T&N Settlement Averages by Disease
Disease Source B&W Basis OC Basis Typical Scheduled Values Meso $210,291 210,291 210,291 $200,000 Lung $70,645 45,261 52,573 $32,000 Othc $41,072 17,408 21,091 $14,750 Nonm $16,429 6,963 10,515 $7,000

Note: B&W and OC derived from Table 5. Scheduled Values from Trust Distribution Procedures of the T&N Trust in the proposed plan of reorganization. Because of its limited history of settlements since leaving CCR, estimates of the amount that T&N would pay now and in the future to resolve asbestos claims for each disease must necessarily be uncertain. We have addressed that uncertainty by deriving conservative estimates of T&N's settlement values that are more likely to underestimate rather than overestimate what

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T&N would pay. We have also, as shown in Table 6, calculated reasonable ranges of settlements for lung cancer, other cancer and nonmalignant claims based on the relative amounts paid by other asbestos defendants. To simplify this report it is helpful to base our estimates of T&N's total asbestos liability on one set of values for each disease. We can then defer the complexities of conducting and comparing multiple alterna