Case study: Asbestos liability transaction support

Our analysis supported a successful transaction, helping the client reduce financial uncertainty and improve readiness for strategic initiatives.

Challenge

A large U.S. manufacturing firm was facing significant long-term asbestos liabilities which were projected to remain on its balance sheet for several decades. These liabilities presented substantial enterprise risk and created financial headwinds, including investor reporting, financial disclosures, and drag on earnings.

The company sought to reduce its long-term exposure through a liability transaction but lacked the in-house expertise to accurately assess the full scope and transaction value of the asbestos obligations.

Approach

Milliman supported the client through a multi-phase actuarial due diligence process:

• Independent, tailored liability valuation. We conducted a comprehensive actuarial assessment of the client’s asbestos-related liabilities using actuarially vetted methodologies and data, investing significant effort into understanding the client’s specific exposures, past litigation history, legal strategy, insurance coverage, and outlook. We produced both discounted and undiscounted estimates and cashflows of expected future losses that reflected the true scope of their risk and were grounded in the company’s unique context.
• Transaction planning support. Using our projections, we advised the client on potential transaction structures and costs, helping them better understand the economics of transferring these liabilities to a runoff specialist.
• Support through buyer engagement. We helped the client prepare for discussions with potential third-party acquirers. As an independent advisor, we fielded buyer inquiries and provided additional analyses to support informal bidding processes and negotiations.
• Ongoing expert consultation. Throughout the transaction lifecycle, Milliman remained engaged to provide unbiased expertise, support strategic decisions, and validate assumptions as deal terms evolved.

Impact

By working with Milliman, the client achieved:

• A clear, defensible understanding of its long-term asbestos exposure.
• The ability to assess and compare bids from multiple acquirers based on data-driven insights.
• Enhanced positioning to remove legacy liabilities from the balance sheet and improve capital flexibility.
• Internal alignment among legal, finance, and executive stakeholders through a transparent and collaborative process.
• Assurance in their decision-making with Milliman’s independent expertise, knowing the analysis was free of conflicts of interest.