A key part of James Hardie’s defence of its attempted asbestos cut-and-run
trick was that it was totally surprised by the size of claims, that it just couldn’t forecast asbestos
compensation costs. The funny thing is, CSR could.

As part of an interview with CSR CEO Alec
Brennan for Eureka Report, I strayed into the area of CSR’s battles with its insurers to make them pay up.
CSR has been litigating insurance companies for ten years, winning $150 in two
settlements so far and still fighting another in New Jersey:

Michael Pascoe: What’s your expectation of total asbestos
claims against CSR?

Alex Brennan: Well we have a provision of about $360 million dollars and
that’s a healthy provision. It’s got a
substantial prudential margin on top of the central estimate and our experience
is that the size of the provision really hasn’t changed for years. We do a pretty thorough job in estimating it
and it’s turned out to be pretty much on the money but the other side of the
coin is that we have stuck around and we have met our obligations to people
who’ve been injured.

MP: Has
James Hardie’s board ever asked you for advice on how to do it properly.

AB: I’ve
really steered well clear of the James
Hardie story.

Brennan was smiling while he said the last
sentence. The mystery for me is how could CSR estimate its exposure so well,
when James Hardie couldn’t. Maybe they tried harder and really wanted to know.

Disclosure: The Pascoe family super fund includes CSR
shares – as do most super funds. And most hold James Hardie too.