Fourth Quarter 2026 KPMG Actuarial Report

Valuation of Asbestos-Related Disease Liabilities of former James Hardie entities ("the Liable Entites") to be met by the AICF Trust

Prepared for Asbestos Injuries Compensation Fund Limited ("AICFL")

As at 31 March 2026

16 May 2026

International Towers Sydney 3 300 Barangaroo Ave

Sydney NSW 2000

PO Box H67

Australia Square NSW 1215 Australia

ABN: 91 144 686 046

Telephone: +61 2 9335 7000

Facsimile: +61 2 9335 7001

DX: 1056 Sydney https://www.kpmg.com.au

16 May 2026

Bronwyn Hewish

Chief Executive Officer

Asbestos Injuries Compensation Fund Limited Suite 202, Level 2, 56 Clarence Street

Sydney NSW 2000

Cc Ryan Lada, Chief Financial Officer, James Hardie Industries plc

Mark Hare, Director, Department of Premier and Cabinet, The State of New South Wales The Board of Directors, Asbestos Injuries Compensation Fund Limited

Dear Bronwyn

Valuation of Asbestos-Related Disease Liabilities of former James Hardie entities ("The Liable Entities") to be met by the AICF Trust

We are pleased to provide you with our Annual Actuarial Report relating to the asbestos-related disease liabilities of the Liable Entities which are to be met by the AICF Trust.

The report is effective as at 31 March 2026 and has taken into account claims data and information provided to us by AICFL as at 31 March 2026.

If you have any questions with respect to the contents of this report, please do not hesitate to contact us.

Yours sincerely

Neil Donlevy MA FIA FIAA Grace Ng FIAA

Partner, KPMG Partner, KPMG

Fellow of the Institute of Actuaries of Fellow of the Institute of Actuaries of Australia Australia

Fellow of the Institute of Actuaries (London)

© 2026 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

‌Executive Summary

Important Note: Basis of Report

This valuation report ("the Report") has been prepared by KPMG (ABN 91 144 686 046) in accordance with an "Amended and Restated Final Funding Agreement in respect of the provision of long-term funding for compensation arrangements for certain victims of Asbestos-related diseases in Australia" (hereafter referred to as the "the Amended Final Funding Agreement") between James Hardie Industries NV (now known as James Hardie Industries plc) (hereafter referred to as "James Hardie"), James Hardie 117 Pty Limited, the State of New South Wales and Asbestos Injuries Compensation Fund Limited ("AICFL") which was signed on 21 November 2006.

This Report is intended to meet the requirements of the Amended Final Funding Agreement and values the asbestos-related disease liabilities of the Liable Entities to be met by the AICF Trust.

This Report is not intended to be used for any other purpose and may not be suitable, and should not be used, for any other purpose. Opinions and estimates contained in the Report constitute our judgment as of the date of the Report.

The information contained in this Report is of a general nature and is not intended to address the objectives, financial situation or needs of any particular individual or entity. It is provided for information purposes only and does not constitute, nor should it be regarded in any manner whatsoever as, advice and is not intended to influence a person in making a decision in relation to any financial product or an interest in a financial product. No one should act on the information contained in this Report without obtaining appropriate professional advice after a thorough examination of the accuracy and appropriateness of the information contained in this Report having regard to their objectives, financial situation and needs.

In preparing the Report, KPMG has relied on information supplied to it from various sources and has assumed that the information is accurate and complete in all material respects. KPMG has not independently verified the accuracy or completeness of the data and information used for this Report.

Except insofar as liability under statute cannot be excluded, KPMG, its executives, directors, employees and agents will not be held liable for any loss or damage of any kind arising as a consequence of any use of the Report or purported reliance on the Report including any errors in, or omissions from, the valuation models.

The Report must be read in its entirety. Individual sections of the Report, including the Executive Summary, could be misleading if considered in isolation. In particular, the opinions expressed in the Report are based on a number of assumptions and qualifications which are set out in the full Report.

Introduction

The Amended Final Funding Agreement requires the completion of an Annual Actuarial Report evaluating the potential asbestos-related disease liabilities of the Liable Entities to be met by the AICF Trust. KPMG has been retained by AICFL to provide this Annual Actuarial Report as required under the Amended Final Funding Agreement and this is detailed in our Engagement Letter dated 13 November 2025.

The Liable Entities are defined as being the following entities:

• Amaca Pty Ltd (formerly James Hardie & Coy);

• Amaba Pty Ltd (formerly Jsekarb, James Hardie Brakes and Better Brakes); and

• ABN60 Pty Ltd (formerly James Hardie Industries Ltd).

In addition, the liability for Baryulgil claims is deemed to be a liability of Amaca by virtue of the James Hardie (Civil Liability) Act 2005 (NSW). Under Part 4 of that Act, Amaca is liable for the "Marlew Asbestos Claims" or "Marlew Contribution Claims" as defined in that Act.

Our valuation is on a central estimate basis and is intended to be effective as at 31 March 2026. It has been based on claims data and information as at 31 March 2026 provided to us by AICFL.

Overview of Recent Claims Experience and comparison with previous valuation projections

In this section we compare the actual experience in 2025/26 (referred to in the following tables as "FY26 Actual") with the projections for 2025/26 that were contained within our previous valuation report at 31 March 2025. We will refer to these projections for 2025/26 as "FY26 Expected" in the tables that follow.

Claim numbers

There have been 298 mesothelioma claims reported in 2025/26, a 26% decrease compared to the 403 mesothelioma claims reported in 2024/25 and 21% below expectations for 2025/26 (378 claims).

Direct claims were 21% below expectations with 60 fewer claims than expected. Cross claims were 21% below expectations with 20 fewer claims than expected.

For non-mesothelioma claims (excluding workers compensation claims), there have been 179 claims reported in 2025/26, which is a 23% decrease compared to the 231 claims reported in 2024/25 and 4% below expectations for 2025/26 (186 claims).

The following table shows the comparison of actual experience with that which had been forecast at the previous valuation.

Table E.1. Comparison of claim numbers

Average Claim Awards

Average claims awards in 2025/26 have been higher than expectations for the 70-80 and 80+ year old cohorts for direct mesothelioma claims, and lower than expectations for the other age cohorts.

For the other disease types, average claim sizes have been higher than expectations for asbestosis and lower than expectations for all other disease types.

The following tables shows the comparison of actual experience with that which had been forecast at the previous valuation.

Table E.2. Comparison of average claim size of mesothelioma non-nil claims

Note: FY25 Actuals have been inflated (by 4%) to mid 2025/26 values

Table E.3. Comparison of average claim size of non-mesothelioma non-nil claims

Note: FY25 Actuals have been inflated (by 4%) to mid 2025/26 values

Cashflow expenditure: gross and net

Gross cashflow expenditure, at $162.2m, was 15% below expectations. Net cashflow expenditure, at $153.0m, was 14% below expectations.

Table E.4. Comparison of cashflow

Liability Assessment

At 31 March 2026, our projected central estimate of the liabilities of the Liable Entities (the Discounted Central Estimate) to be met by the AICF Trust is $1,351.1m (2025: $1,472.4m).

We have not allowed for the future Operating Expenses of the AICF Trust or the Liable Entities in the liability assessment.

The following table shows a summary of our central estimate liability assessment and compares the current assessment with our previous valuation.

Table E.5. Comparison of central estimate of liabilities

Comparison with previous valuation

In the absence of any change to the claim projection assumptions from our 31 March 2025 valuation, we would have projected a Discounted Central Estimate liability of $1,320.3m as at 31 March 2026.

The decrease of $152.1m relative to the valuation result at 31 March 2025 is due to:

• A decrease of $169.6m for the impact of actual claims payments (which reduces the liability). The chart below separately shows the impact of the expected payments (a reduction of $178.4m) and the variance between actual and expected payments (an increase of $8.8m);

• An increase of $53.4m for the "unwind of discount"; and

• A decrease of $35.9m resulting from changes to the yield curve between 31 March 2025 and 31 March 2026.

  Our liability assessment at 31 March 2026 of $1,351.1m therefore represents an increase of $30.8m arising from changes to the actuarial assumptions. The increase is principally a consequence of:

• Increases to the assumed number of non-mesothelioma claims for 2026/27 (and all future years) ($10.2m);

• Increases to average claim sizes and legal costs for a small number of segments ($10.7m)

• Lower assumed future insurance recoveries ($4.7m);

• Lower assumed future cross claim recoveries ($6.4m); offset by

• Favourable nil settlement experience (-$2.0m).

  The following chart shows an analysis of the change in our liability assessment from 31 March 2025 to 31 March 2026 on a discounted basis.

  Figure E.1. Analysis of change in central estimate liability (discounted basis)

  10.3

  1,472.4

  -

  10.7

  8.8

  2.9

  4.2

  10.2

  2.0

  2.9

  1,351.1

  1,320.3

  35.9

1,500

Discounted central estimate ($m)

1,400

1,300

Net Liability at 31 March 2025

Net Claims Payments (expected)

Unwind of discount

Change in discount rate

Variance in actual vs expected

Expected net liability at 31 March 2026: no actuarial changes

Mesothelioma direct claims reporting for FY27 onwards

Mesothelioma cross claims reporting for FY27 onwards

Incidence pattern / age mix for mesothelioma claims

Non-mesothelioma claims reporting for FY27

Incidence pattern for non-mesothelioma claims

Nil Settlement Rate

Average claim sizes and legal costs

Other

Net Liability at 31 March 2026

1,200

Note: Green bars signal that this factor has given rise to a decrease in the liability whilst light blue bars signal that this factor has given rise to an increase in the liability.

Amended Final Funding Agreement calculations

The Amended Final Funding Agreement sets out the basis on which payments will be made to the AICF Trust.

Additionally, there are a number of other figures specified within the Amended Final Funding Agreement that we are required to calculate. These are:

• Discounted Central Estimate;

• Term Central Estimate; and

• Period Actuarial Estimate.

  Table E.6. Amended Final Funding Agreement calculations

  	$m
  Discounted Central Estimate (net of cross-claim recoveries, Insurance and Other Recoveries)	1,351.1
  Period Actuarial Estimate (net of cross-claim recoveries, gross of Insurance and Other Recoveries) comprising:	504.4
  Discounted value of cashflow in 2026/27	180.3
  Discounted value of cashflow in 2027/28	171.2
  Discounted value of cashflow in 2028/29	152.9
  Term Central Estimate (net of cross-claim recoveries, Insurance and Other Recoveries)	1,324.6

  The actual funding amount due at a particular date will depend upon a number of factors, including:

• the net asset position of the AICF Trust at that time;

• the free cash flow amount of the James Hardie Group in the preceding financial year; and

• the Period Actuarial Estimate in the latest Annual Actuarial Report.

Uncertainty

Estimates of asbestos-related disease liabilities are subject to considerable uncertainty, significantly more than personal injury liabilities in relation to other causes, such as CTP or Workers Compensation claims.

It should therefore be expected that the actual emergence of the liabilities will vary from any estimate. As indicated in Figure E.2, depending on the actual out-turn of experience relative to that currently forecast, the variation could potentially be substantial.

Thus, no assurance can be given that the actual liabilities of the Liable Entities to be met by the AICF Trust will not ultimately exceed the estimates contained in this Report. Any such variation may be significant.

We have performed sensitivity testing to identify the impact of different assumptions upon the size of the liabilities. The different scenarios selected are documented at Section 11.2 of this report.

We have not included a sensitivity test for the impact of changes in discount rates although, as noted in this Report, changes in discount rates can introduce significant volatility to the Discounted Central Estimate result reported at each year-end.

We note that these sensitivity test ranges are not intended to correspond to a specified probability of sufficiency, nor are they intended to indicate an upper bound or a lower bound of all possible outcomes.

Figure E.2. Sensitivity testing results - Impact around the Discounted Central Estimate (in $m)

Base number of claims

Average claim and legal cost size

Nil settlement rate

Superimposed inflation

Mesothelioma incidence pattern

Combination (1)

Combination (2)

-400 -300 -200 -100 0 100 200 300 400 500 600 700

The single most sensitive assumption shown in the chart is the peak period of claims reporting against the Liable Entities. Shifting the pattern of incidence by 2 years could add approximately $259m (19%) on a discounted basis to our valuation (as shown in the above chart by the scenario labelled "mesothelioma incidence pattern").

Table E.7. Summary results of sensitivity analysis ($m)

Whilst the table above indicates a range around the discounted central estimate of liabilities of -$257m to +$643m, the actual cost of liabilities could fall outside that range depending on the actual experience.

Executive Summary Not Report

Please note that this executive summary is intended as a brief overview of our Report. To properly understand our analysis and the basis of our liability assessment requires examination of our Report in full.

Contents

Executive Summary i

1. Scope and Purpose 1

2. Data 8

3. Valuation Methodology and Approach 11

4. Claims Experience: Mesothelioma Claim Numbers 23

5. Claims Experience: Claim numbers (non-mesothelioma) 35

6. Exposure and Latency Experience and Incidence Pattern Assumptions 39

7. Claims Experience: Average Claims and Legal Costs 51

8. Claims Experience: Nil Settlement Rates 70

9. Economic and Other Assumptions 78

10. Valuation Results 84

11. Uncertainty 92

    Appendices

    1. Projected inflated and undiscounted cashflows ($m) 96

    2. Projected inflated and discounted cashflows ($m) 97

    3. Glossary of terms used in the Amended Final Funding Agreement 98

1. ‌Scope and Purpose

   1. Introduction

      The Amended Final Funding Agreement requires the completion of an Annual Actuarial Report evaluating the potential asbestos-related disease liabilities of the Liable Entities to be met by the AICF Trust.

      1. Liable Entities

         The Liable Entities are defined as being the following entities:

         • Amaca Pty Ltd (formerly James Hardie & Coy);

         • Amaba Pty Ltd (formerly Jsekarb, James Hardie Brakes and Better Brakes); and

         • ABN60 Pty Ltd (formerly James Hardie Industries Ltd).

           In addition, the liability for Baryulgil claims is deemed to be a liability of Amaca by virtue of the James Hardie (Civil Liability) Act 2005 (NSW). Under Part 4 of that Act, Amaca is liable for "Marlew Asbestos Claims" or "Marlew Contribution Claims" as defined in that Act.

           Baryulgil claims are discussed further in Section 5.8.

      2. Personal asbestos claims

         Under the Amended Final Funding Agreement, the liabilities to be met by the AICF Trust relate to personal asbestos-related disease liabilities of the Liable Entities.

         The precise scope of the liabilities is documented in Section 1.2 and in Appendix C of this Report.

      3. Purpose of report

         KPMG has been retained by AICFL to provide an Annual Actuarial Report as required under the Amended Final Funding Agreement and this is detailed in our Engagement Letter dated 13 November 2025.

         The prior written consent of KPMG is required for any other use of this Report or the information contained in it.

         Our valuation is effective as at 31 March 2026 and has been based on claims data and information as at 31 March 2026 provided to us by AICFL.

   2. Scope of report

      We have been requested to provide an actuarial assessment as at 31 March 2026 of the asbestos-related disease liabilities of the Liable Entities to be met by the AICF Trust, consistent with the terms of the Amended Final Funding Agreement.

      The assessment is on a central estimate basis and is based on the claims experience as at 31 March 2026.

      A "central estimate" liability assessment is an estimate of the expected value of the range of potential future liability outcomes. In other words, if all the possible values of the liabilities are expressed as a statistical distribution, the central estimate is an estimate of the mean of that distribution.

      It is of note that our liability assessment:

      • Relates to the Liable Entities and Marlew (in relation to Marlew Claims arising from asbestos mining activities at Baryulgil).

      • Is intended to cover:

        • The amount of settlements, judgments or awards for all Personal Asbestos Claims.

        • Claims Legal Costs incurred by the AICF Trust in connection with the settlement of Personal Asbestos Claims.

      • Is not intended to cover:

        • Personal injury or death claims arising from exposure to asbestos which took place outside Australia.

        • Personal injury or death claims, arising from exposure to Asbestos, which are brought in Courts outside Australia.

        • Claims for economic loss, other than any economic loss forming part of an award for damages for personal injury and/or death.

        • Claims for loss of property, including those relating to land remediation.

        • The costs of asbestos or asbestos product removal relating to asbestos or asbestos products manufactured or used by or on behalf of the Liable Entities.

      • Includes an allowance for:

        • Workers Compensation claims, being claims from former employees of the Liable Entities, but only to the extent that such liabilities are not met by a Workers Compensation Scheme or Policy (see section 1.2.1).

        • Compensation to the NSW Dust Diseases Authority ("DDA") or a Workers Compensation Scheme by way of a claim by such parties for contribution or reimbursement from the Liable Entities, but only to the extent that the cost of such claims is within the limits of funding for such claims as outlined within the Amended Final Funding Agreement.

      • Assumes that the product and public liability insurance policies of the Liable Entities will continue to respond to claims as and when they fall due. We have not made any allowance for the impact of any disputation concerning Insurance Recoveries, nor for any legal costs that may be incurred in resolving such disputes.

      • Makes no allowance for:

        • Insurance Recoveries from insurance policies placed from 1986 onwards which were placed on a "claims made" basis.

        • the future Operating Expenses of the Liable Entities or the AICF Trust. Separate allowance for future Operating Expenses should be considered by the management of AICFL.

        • the inherent uncertainty of the liability assessment. That is, no additional provision (or risk margin) has been included in excess of a central estimate.

      Readers of this Report may refer to our previous reports which are available at https://www.ir.jameshardie.com.au and https://www.aicf.org.au.

      1. Workers Compensation

         Workers Compensation claims are claims made by former employees of the Liable Entities. Such past, current and future reported claims were insured with, amongst others, Allianz Australia Limited, QBE and the various State-based Workers Compensation Schemes.

         Under the Amended Final Funding Agreement, the part of a future Workers Compensation claim that is met by a Workers Compensation Scheme or Policy of the Liable Entities is outside of the AICF Trust. The AICF Trust is, however, to provide for any part of a claim not covered by a Workers Compensation Scheme or Policy (e.g. as a result of the existence of limits of indemnity and policy deductibles on those policies of insurance). On this basis our liability assessment in relation to Workers Compensation claims and which relates to the AICF Trust, includes only the amount borne by the Liable Entities in excess of the anticipated recoveries due from a Workers Compensation Scheme or Policy.

         In making our assessment we have assumed that the Workers Compensation insurance programme will continue to respond to claims by former employees of the Liable Entities as and when they fall due. To the extent that they were not to respond owing to (say) insurer insolvency, Insurer Guarantee Funds may be available to meet such obligations.

      2. Dust Disease Authority and Other Reimbursements

         The Amended Final Funding Agreement indicates that the AICF Trust is intended to meet Personal Asbestos Claims and that claims by the DDA or a Workers Compensation Scheme for reimbursement will only be met up to a certain specified limit (aggregated across the DDA and Workers Compensation Schemes), being:

         • In the first financial year (2006/07) a limit of $750,000 applied;

         • In respect of each financial year thereafter, that limit is indexed annually in line with the Consumer Price Index. The annual limit for FY2027 will be $1.30m (FY2026: $1.25m);

         • There is an overall unindexed aggregate cap of $30m;

         • At 31 March 2026, AICFL has paid out $17.03m to the DDA. The remaining maximum amount payable is $12.97m.

           The cashflow and liability figures contained within this Report have already removed that component of any reimbursements that will not be met by the AICF Trust owing to the application of these limits and caps.

      3. Risk Margins

         Australian-licensed insurance companies are required to hold, and many non-insurance companies elect to hold, insurance and self-insurance claims provisions at a level above the central estimate basis to reflect the uncertainty attaching to the liability assessment and to include an allowance in respect of that uncertainty.

         A risk margin is an additional amount held, above the central estimate, so as to increase the likelihood of adequacy of the provisions to meet the ultimate cost of settlement of those liabilities. We note that the Amended Final Funding Agreement envisages the ongoing financing of the AICF Trust is to be based on a "central estimate" approach and that the Annual Actuarial Report should provide a Discounted Central Estimate valuation.

         Accordingly, we have made no allowance for any risk margins within this Report.

   3. Areas of potential exposure

      As identified in Section 1.2, there are other potential sources of claims exposure beyond those directly considered within this Report. However, in a number of cases they are unquantifiable even if they have the potential to generate claims. This is especially the case for those sources of future claims where there has been no evidence of claims to date.

      1. General areas of potential exposure

         Areas of potential changes in claims exposure we have not explicitly allowed for in our valuation include, but are not limited to:

         • Future significant individual landmark and precedent-setting judicial decisions;

         • Significant medical advancements;

         • Unimpaired claims, i.e. claims for fear, stress, pure nervous shock or psychological illness;

         • A change in the basis of compensation for asymptomatic pleural plaques for which no associated physical impairment is exhibited;

         • A proliferation (compared to past and current levels of activity) of "third-wave" claims,

           i.e. claims arising as a result of indirect exposure such as home renovation, washing clothes of family members that worked with asbestos, or from workers involved in the removal of asbestos or the demolition of buildings containing asbestos;

         • Changes in legislation, especially those relating to tort reform for asbestos sufferers;

         • Introduction of new, or elimination of existing, heads of damage;

         • Exemplary and aggravated or punitive damages (being damages awarded for personal injuries caused as a result of negligence or reckless conduct);

         • Changes in the basis of apportionment of awards for asbestos-related diseases for claimants who have smoked;

         • Changes to taxation; and

         • Future bankruptcies of other asbestos claim defendants (i.e. other liable manufacturers or distributors).

           Nonetheless, implicit allowance is made in respect of some of these items in the allowance for superimposed inflation included in our liability assessment. Furthermore, to the extent that some of these have emerged in past claims experience, they are reflected in our projections.

      2. Third-wave claims

         We have made allowance for so-called "third-wave" claims. These are defined as claims for personal injury and / or death arising from asbestos exposure during home renovations by individuals or to builders involved in such renovations. Such claims are allowed for within the projections to the extent to which they have arisen to date and to the extent our exposure model factors in these exposures in its projection.

         We have not allowed for a significant additional surge in third-wave claims (over and above current levels of activity) in the future arising from renovations, but conversely we have not allowed for a tempering of those third-wave claims already included within our projection as a result of improved education of individuals as to the risks of such home renovations, or of any local Councils or State Governments passing laws in this regard. It should be noted that claims for the cost of asbestos or asbestos product removal from homes and properties or any claims for economic loss arising from asbestos or asbestos products being within such homes and properties is not required to be met by the AICF Trust.

   4. Data reliances and limitations

      KPMG has relied upon the accuracy and completeness of the data with which it has been provided. KPMG has not verified the accuracy or completeness of the data, although we have undertaken steps to test its consistency with data previously received.

      However, KPMG has placed reliance on the data previously received, and currently provided, as being accurate and complete in all material respects.

   5. Uncertainty

      It must be understood that estimates of asbestos-related disease liabilities are subject to considerable uncertainty.

      This is due to the fact that the ultimate disposition of future claims will be subject to the outcome of events that have not yet occurred. Examples of these events, as noted in Section 1.3, include jury decisions, court interpretations, legislative changes, epidemiological developments, medical advancements, public attitudes, potential additional third-wave exposures and social and economic conditions such as inflation.

      Therefore, it should be expected that the actual emergence of the liabilities will vary, perhaps materially, from any estimate. Thus, no assurance can be given that the actual liabilities of the Liable Entities to be met by the AICF Trust will not ultimately exceed the estimates contained herein. Any such variation may be significant.

   6. Distribution and use

      The purpose of this Report is as stated in Section 1.1.

      This Report should not be used for any purpose other than those specified. This Report will be provided to the Board and management of AICFL.

      This Report will also be provided to the Board and management of James Hardie, the NSW Government and to EY in their capacity as auditors to both James Hardie and AICFL.

      We understand that this Report may be filed with the ASX and placed on James Hardie's website in its entirety.

      KPMG consents to this Report being made available to the above-mentioned parties and for the Report to be distributed in the manner described above.

      To the extent permitted by law, neither KPMG nor its Executives, directors or employees will be responsible to any third parties for the consequences of any actions they take based upon the opinions expressed with this Report, including any use of or purported reliance upon this Report not contemplated in Section 1.2. Any reliance placed is that party's sole responsibility.

      Where distribution of this Report is permitted by KPMG, the Report may only be distributed in its entirety and judgements about the conclusions and comments drawn from this Report should only be made after considering the Report in its entirety and with necessary consultation with KPMG.

      Readers are also advised to refer to the "Important Note: Basis of Report" section at the front of the Executive Summary of this Report.

   7. Date labelling convention used in this Report

      In our analyses throughout this Report (unless otherwise stated), the "year" we refer to aligns with the financial year of AICFL and James Hardie and runs from 1 April to 31 March.

      A "2008" notified claim would be a claim notified in the period 1 April 2008 to 31 March 2009. This might also be referred to as "2008/09" or "FY09".

      Similarly, a "2025" claim settlement would be a claim settled in the period 1 April 2025 to 31 March 2026. This might also be referred to as "2025/26" or "FY26".

   8. Author of the report

      This Report is authored by Neil Donlevy, a Fellow of the Institute of Actuaries (London) and a Fellow of the Institute of Actuaries of Australia.

      This Report is co-authored by Grace Ng, a Fellow of the Institute of Actuaries of Australia.

      In relation to this Report, the primary regulator for Neil Donlevy is the Institute of Actuaries of Australia.

   9. Professional standards and compliance

      This Report details a valuation of the outstanding claims liabilities of entities which hold liabilities with features similar to general insurance liabilities.

      In preparing this Report, we have complied with the Professional Standard 302 of the Institute of Actuaries of Australia ("PS302"), "Valuation of General Insurance Claims".

      However, as we note in Section 1.2, this Report does not include an allowance for the future Operating Expenses of the AICF Trust (which are estimated by AICFL) and nor does it include any allowance for a risk margin to reflect the inherent uncertainty in the liability assessment.

   10. Control processes and review

       This valuation report and the underlying analyses have been subject to technical review and internal peer review.

       The technical review focuses on ensuring that the valuation models and supporting claims experience analyses that are carried out are performed correctly and that the calculations are being correctly applied. The technical review also focuses on ensuring that the data that is being used has been reconciled insofar as possible.

       Internal peer review involves a review of the approach, the methods, the assumptions selected and the professional judgments applied.

       Both the technical review and internal peer review processes are applied to the Report as well as the valuation models.

   11. Basis of preparation of Report

       We have been advised by the management of AICFL to prepare the Report on a "going concern" basis (i.e. we should assume that AICFL will be able to meet any shortfall in the cost of the liabilities of the Liable Entities as they fall due).

       The cashflow estimates contained in this Report assume that claims against the Liable Entities will continue to be paid in full as and when they fall due.

2. ‌Data

   1. Data provided to KPMG

      We have been provided with the following data by AICFL:

      • Claims dataset at 31 March 2026 with individual claims listings;

      • Accounting transactions dataset at 31 March 2026 (which includes individual claims payment details); and

      • Detailed insurance bordereaux information (being a listing of claims filed with the insurers of the Liable Entities) as at 31 March 2026.

      We have allowed for the benefits of the product and public liability insurance policies of the Liable Entities based on information provided to us by AICFL relating to the insurance programme's structure, coverage and layers.

      We have also considered the claims data listings which formed the basis of our previous valuation assessments. The data structures provided for the claims and accounting datasets are consistent with those provided at previous valuations.

   2. Data limitations

      We have tested the consistency of the various data sets provided to us at different valuation dates. Section 2.3 outlines the nature of the testing undertaken.

      However, we have not otherwise verified the data and have instead relied on the data provided as being complete and accurate in all material respects.

      We have relied upon the robustness of AICFL's internal administration and systems as to the completeness of the data provided.

      Consequently, should there be material errors or incompleteness in the data, our assessment could also be affected materially.

   3. Data reconciliation and testing

      We have performed a reconciliation of the data provided at 31 March 2026 with the data provided at 31 March 2025.

      We have undertaken a number of tests and reconciliations to test the accuracy of the data to the extent possible, noting the limitations outlined above.

      1. Reconciliation with previous valuation's data

         We have performed a reconciliation of the claims database as at 31 March 2026 with that provided at 31 March 2025.

         Our findings are:

         • Claims notifications: There have been no new claims reported that had a report date prior to 31 March 2025. No claims have changed their date of notification.

         • Portfolio category: There have been 14 claims that have changed category. 7 from asbestosis to ARPD & Other (all related to one claimant), 3 from ARPD & Other to asbestosis, 2 from ARPD & Other to mesothelioma, 1 from wharf to asbestosis, and 1 from mesothelioma to lung cancer.

         • Settlement date: There has been one claim which has changed their settlement date.

           Changing and developing data is not unexpected or to be considered as adverse. Indeed, changing data is common to all claims administration systems. We do not consider the number or extent of the changes noted above to be unreasonable, nor do we consider the changes to be material to the valuation.

      2. Reconciliation of claims settlement amounts between claims and accounting databases

         We have mapped the financial data between the claims and accounting databases into standardised groupings as follows:

         Table 2.1: Grouping of financial data from claims and accounting databases

         Award	CLAIMS DATABASE	ACCOUNTING DATABASE
         	Damages (gross of cross-claims) plus DDB reimbursement plus Medicare (from Accounting Database)	Damages plus DDB reimbursements plus Medicare
         Costs / Other	Costs plus Other less Medicare (from accounting database)	Costs plus Consulting
         Defence legal costs	Defence legal costs	Defence legal costs

         Note: Recovery amounts are available from the accounting database

         We have compared the payment records between the claims database and the accounting database from the earliest date to the current file position.

         The table below shows the results of this reconciliation for all claim transactions to date.

         Table 2.2: Comparison of amounts from claims and accounting databases ($m)

         CLAIMS DATABASE		ACCOUNTING DATABASE
         Damages (gross of recoveries, excluding medicare)	2,766.8	Damages (gross of recoveries)	2,770.2
         Costs	90.5	Costs	91.7
         DDB	19.7	DDB	19.8
         Other (inc Medicare)	6.3	Consulting	2.2
         		Medicare	3.2
         		Interest	1.0
         Defence legal costs	287.1	Defence legal costs	287.8
         Total Value	3,170.3	Total Value	3,175.9
         Standardisation
         Award plus Medicare plus DDB	2,789.7	Award plus Medicare plus DDB	2,793.2
         Costs / Other	93.5	Costs / Other	94.9
         Defence legal costs	287.1	Defence legal costs	287.8
         Total Value	3,170.3	Total Value	3,175.9

         Once the standardisation has been undertaken, the two datasets reconcile closely - with differences for claim awards totalling approximately $3.4m (31 March 2025: $3.2m).

         Our approach for each claim record has been to take the maximum value of the two databases for each claim record. This results in the following overall totals being used in our analysis:

         • $2,793.3m for the claims award component;

         • $95.2m for the costs / other component; and

         • $287.9m for the defence legal costs component.

         This approach, of taking the maximum value for each claims record, may result in some minor prudence in our overall analysis although the amount of prudence is not considered to be significant in the context of the size of the potential liabilities and the underlying uncertainty in any valuation estimating future claims costs over the next 40 years or more.

   4. Data conclusion

      We have not verified the underlying data nor have we undertaken "auditing at source". No material data issues have been identified and notified to us by the Approved Auditor of AICFL (EY) during their testing.

      We have tested the data for internal consistency with the data provided at the previous valuation (31 March 2025).

      Based on that testing and reconciliation, and subject to the limitations described in Section 1.4, we have formed the view that:

      • Generally, the data is consistent between valuations, with any differences in the data being readily explainable;

      • The financial data appears to reconcile reasonably between the two data sources (the claims dataset and the accounting transactions datasets);

      • Any data issues that have emerged are not significant in relation to the size of the liabilities; and

      • The data is appropriate for use for the purpose of this Report.

3. ‌Valuation Methodology and Approach

   1. Valuation methodology changes

      We have maintained the core valuation methodology adopted at our previous valuation.

      The most recent material change in the methodology took place at 31 March 2025 when we derived separate assumptions for direct and cross claims for asbestosis in relation to:

      • estimated future claim numbers (but not including having different latency assumptions);

      • average claim sizes; and

      • nil settlement rates.

        Otherwise, the previous most recent material change in the methodology took place at 31 March 2020 when we separated the portfolio of mesothelioma claims between direct claims and cross-claims and for each of the four age cohorts. This included deriving separate assumptions for direct claims and cross claims and for each of the four age cohorts for:

      • estimated future claim numbers (including latency assumptions);

      • average claim sizes (including incidence rates of large claims);

      • average legal costs; and

      • nil settlement rates (but only for direct and cross, without separate age-based assumptions).

   2. Overview of current methodology

      The methodology involves assessing the liabilities in two separate components, being:

      • Allowance for the cost of settling claims which have already been reported but have not yet been settled ("pending claims"); and

      • Allowance for the cost of settling claims which have not yet been reported ("Incurred But Not Reported" or "IBNR" claims).

        For pending claims, we have used the case estimates (where available) with some adjustments to reflect the extent to which the case estimates (on average) tend to overstate the ultimate cost. For IBNR claims we have used an "average cost per claim method".

        In brief, the overall methodology may be summarised as follows:

      • Project the future number of claims expected to be reported in each future year by disease type (for product and public liability) and for Workers Compensation and wharf claims taking into account the expected future incidence of mesothelioma and other diseases and also the past rate of co-joining of the Liable Entities;

      • Analyse past average attritional claim costs of non-nil claims in mid 2025/26 money terms. We have defined attritional claims to be claims which are less than $1m in 2006/07 money terms. We estimate a baseline attritional non-nil average claim cost in mid 2025/26 money terms. This represents the Liable Entities' share of a claim rather than the total claim settlement;

      • Analyse past historical average plaintiff/other and defendant legal costs for non-nil claim settlements;

      • Analyse past historical average defendant legal costs for nil claim settlements;

      • Estimate a "large claims loading" for mesothelioma claims by estimating the frequency, or incidence rate, and average claim size and legal cost sizes of such claims (being claims which are in excess of $1m in 2006/07 money terms);

      • Project the pattern and incidence of future claims settlements from the claims reporting profile projected. This is done by using a settlement pattern derived from consideration of past experience of the pattern of delay between claim reporting and claim settlement for each disease type;

      • Estimate the proportion of claims which will be settled with no liability against the Liable Entities by reference to past proportions of claims settled for nil claim cost (we refer to this as the "nil settlement rate");

      • Inflate average claim, plaintiff/other and defence legal costs and large claim costs to the date of settlement of claims allowing for base inflation and (where applicable) superimposed inflation;

      • Multiply the claims numbers which are expected to be settled for non-nil amounts in a period by the inflated average non-nil claim costs (including the "large claims loading") and plaintiff/other and defence legal costs for that period;

      • Make allowance in defence legal costs for that proportion of settled claims which are expected to be settled for no liability but for which defence costs will be incurred;

      • Inflate average defence legal costs of nil claims to the date of settlement of claims allowing for base inflation;

      • Multiply the claims numbers which are expected to be settled for nil amounts in a period by the inflated average defence legal costs for nil claims for that period;

      • Add the expected claims costs and legal payments relating to pending claims (after allowance for the potential savings on case estimates) after making allowance for the assumed settlement pattern of pending claims;

      • This gives the projected future gross cashflow for each future financial year;

      • Adjust the projected gross cashflow (where applicable) for the impact of the annual and aggregate caps on DDA reimbursements;

      • Estimate the recoveries resulting from cross-claims made by the Liable Entities against other parties ("cross-claim recoveries");

      • Project Insurance Recoveries to establish the net cashflows;

      • Discount the cashflows using a yield curve derived from yields on Commonwealth Government Fixed Interest Bonds at the valuation date to arrive at our present value liability assessment.

      It should be noted that this description is an outline and is not intended to be exhaustive in consideration of all the stages we consider or all investigations we undertake. Those other stages are outlined in more detail elsewhere in this Report and readers are advised to refer to those sections for a more detailed understanding of the process undertaken. As discussed elsewhere, the liabilities are established on a central estimate basis.

   3. Disease type and class subdivision

      1. Claims records excluded from our analysis

         We have excluded records that relate to cross-claims brought by the Liable Entities against other defendants. Where the cross-claim is brought as part of the main proceedings the claim is automatically counted in our analysis of the number of claims. However, where the cross-claim by the Liable Entities is severed from the main proceedings, the existence of a separate record in the claims dataset does not indicate an additional claim (or liability) against the Liable Entities. In these circumstances such records are not counted in our analysis.

         We have also excluded "insurance recovery" claims records. This is because the insurance recovery record is a separate record that exists for claims records where an insurance recovery is due. In other words, the claim against the Liable Entity has already been included in our analysis and the insurance recovery record exists for operational purposes only.

      2. Categories of claim

         We have sub-divided the remaining claims into the following groups:

         • Product and Public Liability;

         • Workers Compensation, being claims by former employees of the Liable Entities; and

         • Wharf claims, being claims by individuals whose occupations involved working on the docks or wharves, or where part of their exposure related to wharves.

      3. Categories of disease

         For product and public liability claims, we have separately analysed the individual disease types.

         We have split the data by disease type for these claims because there is sufficient volume of claims to do so, because different disease types can display substantially different average claim sizes or nil settlement rates, and because the incidence pattern of future notifications is expected to vary between the different disease types.

         We have not divided the Workers Compensation or wharf claims data by disease type, given their low financial significance and the reduced credibility of the data if sub-divided by disease type (given the low number of claims).

         For the purposes of our analysis, we have allocated each claim once and therefore to one disease only. We have selected the following order of priority, based on the relative severity of the disease:

         • Mesothelioma;

         • Lung cancer / Other cancer;

         • Asbestosis; and then

         • Asbestos-Related Pleural Disease and Other ("ARPD & Other").

           This means that if a product or public liability claim has mesothelioma as one of its listed diseases, it is counted as a mesothelioma claim. If a product or public liability claim has lung cancer or other cancer as one of its listed diseases (but not mesothelioma), it is counted as a lung cancer claim. If a product or public liability claim has asbestosis as one of its listed diseases, it is only counted as asbestosis if it has no reference to mesothelioma, lung cancer or other cancer as one of its diseases.

           For mesothelioma, we have also separated claims based on the age of the claimant at the date of notification of the claim. We have used four age cohorts, namely:

         • <60 years of age;

         • 60-70 years of age;

         • 70-80 years of age; and

         • >80 years of age.

           We have further separated mesothelioma claims between direct claims and cross claims.

           We have also further separated asbestosis claims between direct claims and cross claims. We have not separated this portfolio by age as the low volumes of claims in a number of the 8 age cohorts would mean identification of trends would not be statistically credible.

   4. Numbers of future claims notifications: mesothelioma

      To project the pattern of incidence of claims against the Liable Entities, we have constructed a model which utilises the following inputs:

      • The current Australian population by year of birth / current age and gender;

      • Standard mortality rates by age and gender. This is used to project the population by year of birth / age at each future year;

      • The relative risk-exposure (or incidence rates) between males and females;

      • The relative risk-exposure by age of person at time of exposure;

      • The exposure to asbestos in Australia;

      • The statistical distribution of the latency period from average exposure separately for direct claims and cross claims, and by age of claimant, together with the underlying parameters (the mean and the standard deviation) of the latency model.

      Detailed discussion of the approach taken is documented in our 31 March 2018 Annual Actuarial Report.

      1. Exposure model

         We have constructed a proxy for exposure by reference to statistics showing the levels of Australian usage of asbestos. We do not have detailed individual exposure information for the Liable Entities, its products or where the products were used and how many people were exposed to those products.

         However, given the market share of James Hardie over the years (through to 1987) and its relative stability, we have used a national pattern of usage as a reasonable proxy for the Liable Entities' exposure.

         Figure 3.1: Consumption and production indices - Australia 1930-2002

         100,000

         90,000

         80,000

         70,000

         60,000

         50,000

         40,000

         30,000

         20,000

         10,000

         1930

         1932

         1934

         1936

         1938

         1940

         1942

         1944

         1946

         1948

         1950

         1952

         1954

         1956

         1958

         1960

         1962

         1964

         1966

         1968

         1970

         1972

         1974

         1976

         1978

         1980

         1982

         1984

         1986

         1988

         1990

         1992

         1994

         1996

         1998

         2000

         2002

         -

         Production Consumption

         Source: World Mineral Statistics Dataset, British Geological Survey, https://www.mineralsuk.com R Virta, USGS Website Annual Yearbook

         There is an implicit assumption within the use of the consumption to derive the level of future claim notifications that:

         • the consumption of asbestos is directly correlated with, and is a suitable proxy for, the number (and extent of exposure) of people exposed to asbestos in any year; and

         • the rate of incidence of individuals developing an asbestos-related disease arising from exposure to asbestos is the same for each exposure year and is independent of the type of asbestos used.

      2. Latency model

         We have continued to assume that the latency pattern (from the average date of exposure) is statistically distributed with a normal distribution.

         We have derived separate latency assumptions for mesothelioma as between direct claims and cross claims. The model projection assumptions are shown in the table below.

         At this valuation, we have maintained both of our mean and standard deviation latency assumptions for both direct claims and cross claims from the previous valuation.

         Table 3.1: Latency assumptions for mesothelioma claims

         	Direct	Cross
         Mean latency	42	42
         Standard deviation of latency	9	10

         The analysis supporting the selection of these parameters is summarised in Section 6.

      3. Calibrating the curve index to current reporting experience

         We take the claim curve index and then calibrate the number of notifications in each future year by reference to the recent levels of claims reporting and the number of claims we have assumed for the 2026/27 financial year. This approach implicitly assumes that:

         • The future rate of incidence of asbestos-related diseases manifesting as a result of a past exposure to asbestos will remain stable;

         • The pattern of diagnosis and the delay between diagnosis and reporting remain stable;

         • The "propensity to claim" by individuals will remain stable; and

         • The rate of co-joining the Liable Entities in common law claims will remain stable.

           Changes to any of these factors over time will result in changes to the actual pattern of incidence of claims reporting.

           The claim curve index also provides us with the proportions of the total number of claims reported in each future year that relate to each of the four age groups and separately for direct claims and cross claims for mesothelioma.

           Our assumptions for the base number of claims projected to be reported in 2026/27 are summarised in Section 4.6 and Section 5.7.

   5. Incidence of claim settlements from future claim notifications

      We derive a settlement pattern by analysing triangulations of the numbers of settlements and claims payments by delay from the year of notification.

      From these settlement pattern analyses, we have estimated the pace at which claims notified in the future will settle, and used this to project the future number, and monetary amount, of settlements in each financial year for each disease type.

      Our analysis and assumptions selected are summarised in Section 9.5.

   6. Average claim costs of IBNR claims

      1. Attritional claims

         We define a large claim as one for which the award is greater than or equal to $1m in 2006/07 money terms (which equates to approximately $2.107m in mid 2025/26 money terms).

         We define an attritional claim as a non-nil, non-large claim. We define a nil claim as one for which the award payable by the relevant Liable Entity is zero.

         We have estimated the following five components to the average cost assessment:

         • Average award (sometimes including plaintiff legal costs) of a non-nil "attritional" claim.

         • Average plaintiff legal / other costs of a non-nil "attritional" claim.

         • Average defence legal costs of a non-nil "attritional" claim.

         • Average defence legal costs of a nil claim.

         • Large claim awards and legal cost allowances.

           All of our analyses have been constructed using past average awards, which have been inflated to mid 2025/26 money terms using a historical base inflation index (of 4% per annum). This allows for basic inflation effects when identifying trends in historical average settlements.

           We then determine a prospective average cost in mid 2025/26 money terms, including an explicit allowance for overseas exposures resulting from the decision in Talifero vs Amaca.

           Our analysis and assumptions are summarised in Section 7.

      2. Large claims loading

         We analyse the historical incidence rate of large claims (being measured as the ratio of the number of large claims to the total number of non-nil claims), and the average claim size and legal costs of these claims.

         We use these to arrive at a "per claim" loading (being the average large claim cost multiplied by the large claim incidence rate per claim), being the additional amount we need to add to our attritional average claim size to allow for large claims.

         We have derived separate incidence rate for each of the four age groups for mesothelioma and a single average claim size assumption for mesothelioma.

         Our analysis and assumptions are summarised in Section 7.8.

      3. Future inflation of average claim sizes

         Allowance for future claim cost inflation is made. This is modelled as a combination of base inflation plus superimposed inflation. This enables us to project future average settlement costs in each future year, which can then be applied to the IBNR claims numbers as they settle in each future year.

         Our analysis and assumptions in relation to claims inflation are summarised in Section 9.2.

   7. Proportion of claims settled for nil amounts

      We apply a "nil settlement rate" to the overall number of settlements to estimate the number of claims which will be settled for nil claim cost (i.e. other than in relation to defence legal costs) and those which will be settled for a non-nil claim cost.

      The prospective nil settlement rate is estimated by reference to the analysis of past trends in the rate of nil settlements.

      We have derived separate nil settlement rate assumptions for direct claims and cross claims for both mesothelioma and asbestosis. We do not derive separate nil settlement rate assumptions by age cohort due to the low volumes of nil claims.

      Our analysis and assumptions selected are summarised in Section 8.

   8. Pending claims

      1. Definition of pending claims

         At 31 March 2026, there were 499 claims for which claim awards have not yet been fully settled by the Liable Entities (272 of these are mesothelioma claims and 138 of these are asbestosis claims). Additionally, there are a number of other claims for which defence legal costs have not yet been settled, even though the awards have been settled.

      2. Evaluating the liability for pending claims

         The excess amount of the liability for pending claims, over the case estimates held, is what the insurance industry terms Incurred But Not Enough Reported ("IBNER").

         Depending on the case estimation procedure of a company and the nature of the liabilities, IBNER can be either positive or negative, with a negative IBNER implying that the ultimate cost of settling claims will be less than case estimates, i.e. that there is some degree of redundancy in case estimates.

      3. Findings

         The table below analyses the adequacy or otherwise of the previous year's case estimates for claims reported through to 31 March 2025 relative to the current cost of those reported claims, after taking into account the 25% saving assumed on case estimates.

         Table 3.2: Change in cost of claims during 2025/26 financial year ($m) - claim award component only

         Figures in $ millions	Current year reported claims	Prior year reported claims	Total
         Adopted estimates for pending claims at 31 March 2025 (undiscounted)	0.0	131.6	131.6
         Paid in the year to 31 March 2026	49.6	87.7	137.3
         Adopted estimates for pending claims at 31 March 2026 (undiscounted)	96.6	45.5	142.1
         Incurred Cost in the financial year FY26	146.2	1.5	147.7
         Incurred Cost in the financial year: FY25	171.2	10.6	181.8

         The table above shows that there has been an increase of $1.5m in the cost of claims that were reported prior to 31 March 2025.

         At 31 March 2025, the prior year claims development was an increase of $10.6m (as shown in the above table); whilst as at 31 March 2024, the prior year claims development was a decrease of $11.4m.

         We have maintained our assumption for the level of redundancy in case estimates on currently reported claims at 25% at this valuation given the latest year has seen a relatively small movement (of approximately 1.1% of opening estimates) and the last three years have on average been broadly in line.

         By way of illustration, a reduction in the assumed level of redundancy in case estimates from 25% to 15% would add around $18m to the central estimate on an undiscounted basis and approximately $15m on a discounted basis.

   9. Insurance Recoveries

      Insurance Recoveries are defined as proceeds which are estimated to be recoverable under the product and public liability insurance policies of the Liable Entities, and therefore exclude any such proceeds from a Workers Compensation Scheme or Policy in which the Liable Entities participate or which the Liable Entities hold.

      In applying the insurance programme we therefore consider only the projected gross cashflows relating to product and public liability claims.

      Historical analysis of the claims data suggests that approximately 97.5% of all liability claims by cost have been product liability claims.

      1. Programme overview

         Until 31 May 1986, the Liable Entities had in place product and public liability insurance policies that were placed on a claims occurring basis.

         Product liability claims were insured under these insurance policies on an "in the aggregate" basis whilst public liability claims were insured on an "each and every loss" basis.

         From 31 May 1986, the insurance policies were placed on a claims made basis in relation to asbestos-related product and public liability cover.

         In summary, the insurance policies were placed as follows:

         • For the period up to June 1976, the insurance policies were written on a claims occurring basis. The insurance was provided by QBE but the cover provided by these policies was commuted in June 2000. Therefore, we have assumed no future Insurance Recoveries from these policies.

         • For the period from June 1976 to 31 May 1986, the insurance policies were written on a claims occurring basis; insured by Lloyds' of London, London Market insurers, Australian insurers and HIH entities.

         • For the period 31 May 1986 to 31 March 1997, the insurance policies were written on a claims-made basis. For the purpose of this Report, we have made no allowance for any future Insurance Recoveries arising from these policies.

      2. Modelling insurance recoveries on the claims occurring programme

         Our methodology for projecting the future insurance recoveries to be collected by AICFL involves the following steps:

         • Identify the current contract positions for each insurance policy year. This assumes that all monies due have been collected and does not allow for the impact of commutations that have taken place.

         • Allocate the projected future gross cashflows to individual insurance policy years using an allocation basis that has been determined by reference to the exposure methodology used to project future claim numbers and also using a "period of exposure" allocation.

         • This gives a projection of how the insurance programme is utilised over time. This method allows us to:

         • evaluate the total insurance recoveries due by payment year;

         • determine how the insurance recoveries due will be assigned to each layer and to each insurer; and

         • identify and allow for when the individual layers are projected to be fully exhausted.

           We then make an additional adjustment to the projected recoveries to exclude those projected future insurance recoveries that are assigned to the participations of insurers who have already commuted their coverage with AICFL and the Liable Entities or insurers who have settled their coverage by way of a Scheme of Arrangement.

      3. Commutations, HIH and Schemes of Arrangement

         Where commutations have been entered into by AICFL in previous years, we have assumed that the insurance liabilities of that company to the Liable Entities have been fully discharged and no further recoveries will fall due.

         Additionally, we have assumed that all monies have been paid in relation to insurance recoveries for the claims occurring period from HIH.

         For the claims occurring period, where a claim filed against a company under a Scheme of Arrangement has been made, we have assumed that the insurance liabilities of that company to the Liable Entities have been fully discharged and no further recoveries will fall due.

         We have made no allowance or adjustment in our valuation for any future commutations with the remaining insurers.

      4. Unpaid insurance recoveries

         We have not included within our liability estimate any allowance for insurance recoveries under the claims occurring period that are due but have not yet been collected.

         We are advised that such monies amount to approximately $0.6m at 31 March 2026 (FY25:

         $0.6m).

         These amounts are more appropriately dealt with as being debtors of AICFL.

      5. Bad and doubtful debt allowance on Insurance Recoveries

         We have made allowance for bad and doubtful debts on future Insurance Recoveries within our valuation by use of the default rates as shown in the table below and as applied to each insurer based on their credit rating as at 31 March 2026.

         Table 3.3: Credit rating default rates by duration

         Rating	Yr. 1	Yr. 2	Yr. 3	Yr. 4	Yr. 5	Yr. 6	Yr. 7	Yr. 8	Yr. 9	Yr. 10	Yr. 11	Yr. 12	Yr. 13	Yr. 14	Yr. 15
         AAA	0.00%	0.03%	0.13%	0.23%	0.34%	0.44%	0.49%	0.57%	0.62%	0.68%	0.70%	0.73%	0.76%	0.81%	0.86%
         AA+	0.00%	0.04%	0.04%	0.08%	0.13%	0.17%	0.22%	0.27%	0.32%	0.37%	0.42%	0.47%	0.52%	0.58%	0.63%
         AA	0.02%	0.03%	0.08%	0.20%	0.33%	0.44%	0.55%	0.65%	0.73%	0.82%	0.88%	0.94%	1.02%	1.08%	1.13%
         AA-	0.02%	0.07%	0.15%	0.21%	0.27%	0.36%	0.42%	0.47%	0.53%	0.59%	0.63%	0.68%	0.69%	0.73%	0.76%
         A+	0.04%	0.07%	0.16%	0.26%	0.34%	0.42%	0.50%	0.59%	0.69%	0.80%	0.90%	1.00%	1.12%	1.26%	1.37%
         A	0.05%	0.12%	0.18%	0.28%	0.38%	0.52%	0.66%	0.78%	0.93%	1.10%	1.23%	1.33%	1.42%	1.48%	1.61%
         A-	0.05%	0.13%	0.21%	0.29%	0.41%	0.53%	0.70%	0.83%	0.93%	1.02%	1.11%	1.21%	1.32%	1.43%	1.51%
         BBB+	0.08%	0.23%	0.41%	0.59%	0.78%	1.01%	1.17%	1.36%	1.59%	1.82%	2.03%	2.18%	2.34%	2.52%	2.71%
         BBB	0.13%	0.32%	0.50%	0.79%	1.07%	1.35%	1.63%	1.89%	2.17%	2.43%	2.69%	2.90%	3.09%	3.21%	3.39%
         NR	3.53%	6.73%	9.46%	11.67%	13.49%	14.96%	16.17%	17.17%	18.06%	18.87%	19.55%	20.13%	20.67%	21.13%	21.58%
         R	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%

         Source: Standard & Poors Global Fixed Income Research, 2025. 2025 Annual Global Corporate Default and Rating Transition Study, Table 26

         NR relates to companies which are Not Rated

         R relates to companies which have been subject to Regulatory Action regarding solvency.

   10. Cross-claim recoveries

       A cross-claim can be brought by, or against, one or more Liable Entities. Cross-claims brought against a Liable Entity ("Contribution Claims") are included in our analysis of the claims experience.

       Cross-claims brought by a Liable Entity relate to circumstances where the Liable Entity seeks to join (as a cross-defendant) another party to the claim in which the Liable Entity is already joined.

       Our approach in the valuation has been to separately value the rate of recovery ("cross-claims recovery rate") as a percentage of the gross award based on historical experience of such recoveries.

       Our analysis and assumptions selected are summarised in Section 9.4.

   11. Discounting cashflows

       Cashflows are discounted based on yields available at the valuation date on Commonwealth of Australia fixed interest Government Bonds ("Commonwealth Government Bonds") of varying coupon rates and durations to maturity.

       Our approach to the determination of the discount rates is unchanged from the approach adopted at 31 March 2025, and is:

       • For years 1 to 16, zero coupon spot rates were determined by reference to the prices, coupons and durations of Commonwealth Government Bonds;

       • For years 19 and onwards, we have selected a uniform long-term discount rate of 6.00% per annum (FY2025: 5.60% per annum); and

       • For years 17 and 18, we have selected spot rates that "linearly interpolate" between the year-16 rate and the year-19 rate (of 6.00%).

       Our selected assumptions are summarised in Section 9.3.

4. ‌Claims Experience: Mesothelioma Claim Numbers

   1. Overview

      The following chart shows the number of mesothelioma claims reported by year of notification.

      Figure 4.1: Number of mesothelioma claims reported annually

      438

      413

      397

      393

      403

      369

      374

      376

      381

      391

      384 372

      305

      309

      298

      276

      270 268 259

      500

      450

      400

      350

      300

      250

      200

      150

      100

      50

      2007

      2008

      2009

      2010

      2011

      2012

      2013

      2014

      2015

      2016

      2017

      2018

      2019

      2020

      2021

      2022

      2023

      2024

      2025

      0

      Year of notification

      Note: Throughout Sections 4 to 9, the date convention used in tables and charts is that (for example) 2008/09 indicates the financial year running from 1 April 2008 to 31 March 2009. Furthermore, unless clearly identifying a calendar year, the label "2008" in charts or tables would indicate the financial year running from 1 April 2008 to 31 March 2009.

      For 2025/26, there were 298 mesothelioma claims reported.

      This represented a 26% decrease relative to the prior year (403 claims).

      Direct claims were 222 claims, a decrease relative to the prior year (293 claims) and below expectations (282 claims).

      Cross claims were 76 claims, a decrease relative to the prior year (110 claims) and below expectations (96 claims).

   2. External statistics on mesothelioma claims incidence

      The following chart compares the total number of mesothelioma cases reported (diagnosed) nationally to the number of mesothelioma claims received by the Liable Entities.

      It should be noted that the two sets of data correspond to different definitions of year and so are not directly comparable and some caution should be exercised.

      The "year" is calendar year for the national cases (i.e. 2012 is the year running from 1 January 2012 to 31 December 2012); whilst for the Liable Entities it is the financial year (i.e. 2012 is the year running from 1 April 2012 to 31 March 2013).

      Figure 4.2: Number of mesothelioma cases reported nationally compared to the number of claims received by the Liable Entities

      900 90.0%

      800 80.0%

      700 70.0%

      600 60.0%

      500 50.0%

      400 40.0%

      300 30.0%

      200 20.0%

      100 10.0%

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      0 0.0%

      Claims received by the Liable Entities Number of cases diagnosed nationally

      Liable Entities as % of national cases (AMR2024) (RHS) Liable Entities as % of national cases (AMR2023) (RHS) Liable Entities as % of national cases initially reported (RHS)

      Sources: Australian Cancer Incidence and Mortality book for Mesothelioma, Australian Institute of Health and Welfare, updated February 2018 for 2000-2013

      Annual Report of the Australian Mesothelioma Registry for 2014 and onwards

      In calendar year 2024, the number of cases diagnosed nationally (as currently reported) was 684. It should be noted there may be a considerable degree of under-reporting in the 2024 year and, to a lesser extent, the 2023 year, noting that:

      • The 2019 year was first reported as 659, and this has increased to 791 (as reported in the 2024 Australian Mesothelioma Registry Report).

      • The 2020 year was first reported as 642, and this has increased to 819 (as reported in the 2024 Australian Mesothelioma Registry Report).

      • The 2021 year was first reported as 722, and this has increased to 836 (as reported in the 2024 Australian Mesothelioma Registry Report).

      These increases in national statistics lead to a lower ratio for the number of Liable Entity claims as a percentage of the number of national cases of mesothelioma. As a consequence, the currently estimated 59% for 2024/25 may be over-stated and (if previous experience of initial under-reporting of the number of national cases were to recur) may be more in the order of 50%.

      It should be noted that not all cases of mesothelioma result in a claim being brought in Common Law. Furthermore, even if a claim is brought, not all claims will involve the Liable Entities.

      In relation to NSW, we have additional information from the Dust Diseases Tribunal (NSW) that indicates what proportion of common law claims the Liable Entities are joined in for NSW.

      For the DDC data, the "year" is financial year (i.e. 2012 is the year running from 1 July 2012 to 30 June 2013). In contrast, in the DDT data, "year" is defined as a calendar year (i.e. 2012 is the year running from 1 January 2012 to 31 December 2012). It should be noted that the three sets of data correspond to different definitions of year and so are not directly comparable and some caution should be exercised.

      Figure 4.3: Number of mesothelioma cases reported in NSW

      300

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      0

      AICF NSW claims reporting DDC claims reporting DDT cases
      
      

      Sources: DDC claims data: Insurance and Care NSW Annual Report 2023/24. Data was not published in the 2024/25 report.

      DDT statistics: provided by the State of New South Wales

      The data would appear to indicate that the Liable Entities are not being increasingly joined in common law claims in NSW, whilst noting that there is variability from year to year (the rate of joining is typically between 55% and 70%; and is 55% for the last two years).

      The chart below shows the mix of national cases by age. The data shows a broadly similar pattern to AICF's own experience, with the proportion of cases relating to people under 70 years of age continuing to trend downward, falling below 20%.

      Figure 4.4: Age profile of mesothelioma cases nationally

      100%

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      0%

      <60 60-70 70-80 80+

      Sources: Australian Institute of Health and Welfare; Australian Mesothelioma Registry Report

      Note: Data by age cohort for 2017 was not published in the 2017 Australian Mesothelioma Registry Report

   3. Profile of mesothelioma claims

      1. Direct claims and cross claims

The following chart shows the number of claims separately as between claims brought by claimants ('direct claims') and claims brought by other defendants ('cross claims').

There was a significant reduction in 2025/26 for both direct and cross claims.

Direct claims saw the lowest claims reporting experience since 2012/13 and cross claims saw the lowest claims reporting experience since 2018/19.

Total claim numbers (at 298 claims) was the lowest aggregate mesothelioma claims reporting experience since 2011/12 (259 claims).

Figure 4.5: Number of mesothelioma claims by type of claim

326 315

309

304

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301

284

288

276

287 294 293

249

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121

90

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68

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56

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0

Year of notification Direct claims Cross claims