15. Accrued Workers' Compensation

The Company is liable under the Federal Mine Safety and Health Act of 1969, as subsequently amended, to provide for pneumoconiosis (occupational disease) benefits to eligible employees, former employees, and dependents. The Company is also liable under various states' statutes for occupational disease benefits. The Company currently provides for federal and state claims principally through a self-insurance program. The occupational disease benefit obligation represents the present value of the actuarially computed present and future liabilities for such benefits over the employees' applicable years of service.

In addition, the Company is liable for workers' compensation benefits for traumatic injuries that are accrued as injuries are incurred. Traumatic claims are either covered through self-insured programs or through state-sponsored workers' compensation programs.

Workers' compensation expense consists of the following components:


	Year Ended December 31
	2011	2010	2009
	(In thousands)
Self-insured occupational disease benefits:
Service cost	$ 2,059	$ 727	$ 531
Interest cost	1,799	675	558
Net amortization	(493)	(1,860)	(2,879)
Total occupational disease	3,365	(458)	(1,790)
Traumatic injury claims and assessments	16,979	9,263	8,904
Total workers' compensation expense	$ 20,344	$ 8,805	$ 7,114

The increase in total workers' compensation expense for the year ended 2011 is related to the acquisition of ICG.

The reconciliation of changes in the benefit obligation of the occupational disease liability is as follows:


	December 31
	2011	2010
	(In thousands)
Beginning of year obligation	$ 17,412	$ 9,702
Service cost	2,059	727
Interest cost	1,799	675
Actuarial loss	7,081	6,993
Benefit and administrative payments	(1,097)	(685)
Acquisition of ICG	26,930	—
Net obligation at end of year	$ 54,184	$ 17,412

At December 31, 2011 and 2010, accumulated losses of $5.5 million and accumulated gains of $2.0 million, respectively, were not yet recognized in occupational disease cost and were recorded in accumulated other comprehensive income. The expected accumulated loss that will be amortized from accumulated other comprehensive income into occupational disease cost in 2012 is $1.1 million.

The following table provides the assumptions used to determine the projected occupational disease obligation:


	Year Ended December 31
	2011	2010	2009
Weighted average assumptions:
Discount rate	5.10%	5.96%	6.11%
Cost escalation rate	3.00%	3.00%	3.00%

Summarized below is information about the amounts recognized in the accompanying consolidated balance sheets for workers' compensation benefits:


	December 31
	2011	2010
	(In thousands)
Occupational disease costs	$ 54,184	$ 17,412
Traumatic and other workers' compensation claims	29,430	24,537
Total obligations	83,614	41,949
Less amount included in accrued expenses	11,666	6,659
Noncurrent obligations	$ 71,948	$ 35,290

As of December 31, 2011, the Company had $60.1 million in surety bonds and letters of credit outstanding to secure workers' compensation obligations.