NARCO Asbestos Trust Annual Reports, 2013–2025

NARCO ended 2025 with $1.260 billion in net claimants’ equity, a modest decline of $3.36 million. Interest and dividend income of $37.56 million, realized securities gains of $18.64 million, and unrealized gains of $72.80 million totaled $128.99 million. After $11.77 million in operating expense, $1.93 million in direct investment expenses, and $39.92 million in current and deferred tax expense, net results contributed $75.36 million toward $78.72 million in claims charged against equity.

Cash payments to claimants totaled $76.18 million, covering 50 pre-established claims and 2,534 Annual Contribution Claims. Operating cash outflows were $12.48 million, and federal tax deposits were $15.10 million. Cash, cash equivalents, and investment securities increased by $26.45 million to $1.324 billion, aided by unrealized appreciation despite net cash outflows. The $78.72 million equity charge differs from cash payments because claims reduce equity when entered in the payment queue. Strong investment gains nearly offset the year’s recognized claims distributions and expenses, leaving equity broadly stable.

NARCO ended 2024 with $1.264 billion in net claimants’ equity, down $74.28 million. Interest and dividend income of $39.35 million, realized securities gains of $6.82 million, and unrealized gains of $43.77 million produced $89.95 million in additions. Operating expense was $8.86 million, direct investment expenses were $2.40 million, and current and deferred tax expenses totaled $43.85 million. Net results added $34.84 million before $109.11 million in claims charged against equity.

The audited cash-flow statement reports $111.18 million in claimant payments, $10.63 million in operating outflows, and $13.05 million in federal tax deposits. Cash, cash equivalents, and investment securities declined by $42.27 million to $1.297 billion. The narrative reports 88 pre-established claims and 3,158 Annual Contribution Claims totaling $110.03 million; the audited payments figure is used here, consistent with the report’s warning that payment timing can produce different totals. Investment gains helped replenish assets, but distributions and other requirements exceeded the year’s net results.

NARCO’s funding structure changed in 2023 when Honeywell paid $1.327 billion on January 30 to complete the buyout of its future funding obligations. The arrangement also transferred the economic value of the Trust’s HWI interest to Honeywell; HWI was sold in February, with proceeds handled under the buyout agreement. Net claimants’ equity increased from $280.71 million to $1.338 billion. The equity statement separately records the buyout funding, a $263.22 million reduction associated with the HWI disposition, $86.23 million in net operating and investment results, and $92.82 million in claims distributions. The increase was therefore principally a funding transaction, not an investment return.

Cash, cash equivalents, and investment securities ended the year at $1.340 billion. The Trust reported $56.32 million in net interest and dividend income, $45.72 million in unrealized securities gains, and $3.82 million in realized securities losses. Operating expense fell to $11.87 million. Audited cash distributions to claimants were $91.90 million; the report’s narrative uses different payment-timing totals. Following the buyout, future claims and operating costs are funded from the Trust’s assets and their earnings, replacing the former ongoing Honeywell funding arrangement.

NARCO’s net claimants’ equity fell from $465.98 million to $280.71 million in 2022. A $233.90 million reduction in HWI’s estimated value to $327.40 million was the main cause, partly offset by an $87.30 million deferred tax benefit. Investment income was $39.95 million, largely reflecting HWI dividends. Operating expense rose to $40.23 million, including $26.75 million in legal fees. Cash payments to claimants totaled $69.21 million, while cash, cash equivalents, and investment securities declined from $53.85 million to $15.14 million.

Honeywell contributed $30.07 million for operations and $0.84 million for pre-established claims, with no Annual Contribution Claims funding reported for the year; HWI paid $39.50 million in cash dividends. In December, the bankruptcy court approved an agreement for Honeywell to make a $1.325 billion payment, subject to adjustments, in exchange for release from future funding obligations and the economic value of the Trust’s HWI interest. That transaction closed in January 2023 and is not part of 2022 cash receipts. The HWI valuation reflected the subsequent sale consideration, rather than a loss on the Trust’s marketable securities portfolio.

NARCO’s net claimants’ equity increased by $106.59 million in 2021 to $465.98 million. The Trust recorded a $189.93 million unrealized increase in HWI’s value and $29.02 million in investment income, offset in part by $70.27 million in deferred tax expense and $20.66 million in operating expense. HWI’s year-end value was $561.30 million after a $50.13 million return of capital. Its $79.00 million cash distribution included that return of capital, so the full receipt should not be treated as investment income.

Cash distributions to claimants reached $128.72 million, and operating cash outflows were $19.44 million. Honeywell contributed $88.14 million for Annual Contribution Claims, $1.41 million for pre-established claims, and $25.59 million for operations. Together with the HWI distribution, these receipts increased cash, cash equivalents, and investment securities by $46.01 million to $53.85 million. Claims charged against equity totaled $136.46 million; the narrative claims totals use a different payment-timing presentation, so the cash figures here follow the audited cash-flow statement.

NARCO ended 2020 with $359.39 million in net claimants’ equity, up from $323.50 million. A $58.30 million unrealized increase in HWI’s value to $421.50 million drove the improvement, partially offset by $21.57 million in deferred tax expense and $13.86 million in operating expense. Investment income outside the valuation change was only $291. The resulting $22.87 million increase before contributions and claims distributions should therefore be understood primarily as a noncash valuation result.

Honeywell provided $78.11 million in Annual Contribution Claims funding, $2.21 million for pre-established claims, and $12.94 million for operations. Cash distributions to claimants were $80.33 million, with operating cash costs of $13.36 million. These inflows and outflows were broadly balanced, leaving cash and cash equivalents of $7.83 million, down $0.43 million. Most of the Trust’s recorded asset value remained in HWI, while ongoing Honeywell contributions supported payments and operating needs.

NARCO’s net claimants’ equity increased modestly to $323.50 million in 2019, but cash, cash equivalents, and investment securities declined from $43.90 million to $8.26 million. The Trust paid $68.03 million in claims and $15.77 million in operating costs. Honeywell supplied $28.92 million in Annual Contribution Claims funding, $7.84 million for pre-established claims, and $10.69 million for operating expenses; those receipts were insufficient to cover the year’s cash requirements.

A $59.80 million unrealized increase in HWI’s value, to $363.20 million, was the main support for reported equity. Investment income was $0.45 million, operating expense was $15.39 million, and deferred tax expense associated with the valuation increase was $22.13 million. Results before contributions and claims distributions added $22.82 million to equity, while recognized claims distributions totaled $67.55 million. The slight increase in equity therefore reflected appreciation in the privately held HWI investment alongside a substantial drawdown of cash and securities.

NARCO ended 2018 with $320.78 million in net claimants’ equity, down $29.87 million. Cash distributions to claimants totaled $42.37 million, and operating cash costs were $20.13 million. Honeywell provided $16.72 million in operating funding and $9.14 million for pre-established claims, while investment income was $1.48 million. Cash, cash equivalents, and investment securities fell by $35.55 million to $43.90 million.

The separately held HWI investment increased in estimated value by $8.90 million to $303.40 million, but that noncash gain did not replenish funds used for payments. Operating expense was $19.61 million, direct investment expenses were $0.26 million, and deferred tax expense was $3.29 million. Results before contributions and claims distributions reduced equity by $13.08 million; claims charged against equity totaled $42.66 million. Payments and operating requirements outpaced cash funding, leaving a larger share of the Trust’s assets concentrated in HWI.

NARCO’s net claimants’ equity was nearly unchanged in 2017, ending at $350.65 million compared with $351.42 million a year earlier. A $9.50 million unrealized increase in HWI’s value and $2.18 million in investment income were outweighed by $21.39 million in operating expense, $0.92 million in direct investment expenses, and $2.24 million in deferred tax expense. Honeywell contributions of $34.30 million for operations and $0.53 million for pre-established claims largely offset the operating shortfall and $22.77 million in claims charged against equity.

Cash payments to claimants totaled $22.82 million, and operating cash outflows were $21.37 million. Cash, cash equivalents, and investment securities declined by $8.08 million to $79.46 million, while the separately held HWI investment was valued at $294.50 million. The stable equity total therefore concealed a shift in asset composition: readily available cash and securities declined while the estimated value of HWI increased.

NARCO ended 2016 with $351.42 million in net claimants’ equity, down from $400.41 million. The principal driver was a $75.00 million unrealized reduction in HWI’s value to $285.00 million, partly offset by a $29.70 million deferred tax benefit. Investment income was $14.64 million, while operating expense rose to $27.55 million and direct investment expenses were $0.22 million. These results reduced equity by $57.98 million before contributions and claims distributions.

Cash, cash equivalents, and investment securities declined only $2.03 million, to $87.54 million. The Trust paid $17.37 million in claims and $27.39 million in operating costs, supported by $23.98 million in Honeywell operating funding, $1.92 million in pre-established-claims funding, a $13.44 million HWI cash dividend, and a $2.25 million tax refund. The much larger decrease in equity primarily reflected the noncash HWI valuation adjustment, rather than an equivalent cash loss.

NARCO’s net claimants’ equity increased from $370.35 million to $400.41 million in 2015, while cash, cash equivalents, and investment securities fell from $107.16 million to $89.57 million. The Trust made $50.11 million in net cash distributions to claimants and paid $17.88 million in operating costs. Cash inflows included a $23.70 million HWI dividend, $19.59 million in operating funding from Honeywell, and $6.29 million in pre-established-claims funding.

Investment income of $25.06 million and a $29.60 million unrealized increase in HWI’s value supported the equity increase. Operating expense rose to $16.60 million, with direct investment expenses of $0.60 million and deferred tax expense of $11.72 million. The HWI holding ended the year valued at $360.00 million. Claims charged against equity were $21.25 million, distinct from the larger cash payments as previously accrued claims were paid. Thus the increase in reported equity coexisted with a reduction in readily available cash and securities.

NARCO ended 2014 with $370.35 million in net claimants’ equity, down from $419.79 million. Cash, cash equivalents, and investment securities declined by $30.54 million to $107.16 million, while the separately held HWI investment increased in estimated value to $330.40 million. Cash payments to claimants totaled $54.87 million, covering 16,002 pre-established claims and 2,287 Annual Contribution Claims. Honeywell contributed $24.72 million for pre-established claims and $5.96 million for operating expenses.

The Trust reported $2.39 million in investment income and a $17.20 million unrealized increase in HWI’s value, against $6.22 million in operating expense, $1.67 million in direct investment expenses, and $6.81 million in deferred tax expense. Results before contributions and claims distributions added $4.41 million to equity. However, claims charged against equity totaled $84.52 million, exceeding the cash paid because claims enter the equity calculation when placed in the payment queue. Funding and investment gains therefore did not fully offset the year’s recognized claims obligations.

NARCO’s first annual report covers April 30, 2013, its inception date, through December 31, 2013. The Trust ended that period with $419.79 million in net claimants’ equity, $137.71 million in cash and cash equivalents, and a $313.20 million investment in ANH Refractories, subsequently known as HarbisonWalker International (HWI). Honeywell provided an initial contribution of $377.55 million in cash and stock and another $91.00 million to fund pre-established claims. The Trust paid 65,069 such claims totaling $91.00 million; no Annual Contribution Claims were paid during this initial period.

Operating expense was $3.17 million, in addition to $1.28 million in pre-effective-date expenses charged directly to equity. A $134.30 million liquidating dividend from ANH helped establish the Trust’s cash resources. The reported $43.52 million increase from operating and investment results principally reflected a $77.31 million unrealized gain on the ANH investment, reduced by $30.61 million in deferred tax expense and operating costs. This valuation gain was separate from the cash funding and distributions that established the Trust.