13. EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plans.

The Company maintains both qualified and non-qualified defined benefit pension plans for its U.S. employees employed prior to April 1, 2010. Generally, the Company computes the benefits based on average earnings over a period prescribed by the plans and credited length of service. The Company's non-qualified defined benefit pension plan provided compensating pension benefits for participants whose benefits have been curtailed under the qualified plan due to Internal Revenue Code limitations. Effective January 1, 2018, participants of the Company's non-qualified defined benefit pension plan may no longer accrue additional service benefits.

Although not required to make contributions under IRS regulations, the following table summarizes the Company's contributions to the defined benefit pension plans for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018		2017		2016
Company contributions	$	77,743	$	10,534	$	30,821

The following table summarizes the Company's pension expense for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018		2017		2016
Pension expense	$	9,728	$	16,299	$	17,188

The following table summarizes the status of these defined benefit plans for U.S. employees for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018			2017
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	316,202		$	281,853
Service cost		9,801			10,949
Interest cost		10,290			10,034
Actuarial (gain)/loss		(29,966	)		24,679
Curtailment		-			(6,209	)
Benefits paid		(6,084	)		(5,104	)
Projected benefit obligation at end of year		300,244			316,202

Change in plan assets:
Fair value of plan assets at beginning of year		210,267			171,506
Actual return on plan assets		(21,395	)		33,331
Actual contributions during the year		77,743			10,534
Administrative expenses paid		-			-
Benefits paid		(6,084	)		(5,104	)
Fair value of plan assets at end of year		260,531			210,267

Funded status at end of year	$	(39,713	)	$	(105,935	)

(Some amounts may not reconcile due to rounding.)

Amounts recognized in the consolidated balance sheets for the periods indicated:


	At December 31,
(Dollars in thousands)	2018			2017
Other assets (due beyond one year)	$	-		$	-
Other liabilities (due within one year)		(7,530	)		(3,871	)
Other liabilities (due beyond one year)		(32,182	)		(102,065	)
Net amount recognized in the consolidated balance sheets	$	(39,713	)	$	(105,935	)

(Some amounts may not reconcile due to rounding.)

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:


	At December 31,
(Dollars in thousands)	2018			2017
Accumulated income (loss)	$	(88,580	)	$	(86,788	)
Accumulated other comprehensive income (loss)	$	(88,580	)	$	(86,788	)

(Some amounts may not reconcile due to rounding.)

Other changes in other comprehensive income (loss) for the periods indicated are as follows:


	Years Ended December 31,
(Dollars in thousands)	2018			2017
Other comprehensive income (loss) at December 31, prior year	$	(86,788	)	$	(96,965	)
Net gain (loss) arising during period		(8,631	)		(4,398	)
Recognition of amortizations in net periodic benefit cost:
Actuarial loss		6,839			8,366
Curtailment loss recognized		-			6,209
Other comprehensive income (loss) at December 31, current year	$	(88,580	)	$	(86,788	)

(Some amounts may not reconcile due to rounding.)

Net periodic benefit cost for U.S. employees included the following components for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018			2017			2016
Service cost	$	9,801		$	10,949		$	10,924
Interest cost		10,290			10,034			9,485
Expected return on assets		(17,202	)		(13,050	)		(11,158	)
Amortization of actuarial loss from earlier periods		6,839			8,366			7,937
Net periodic benefit cost	$	9,728		$	16,299		$	17,188

Other changes recognized in other comprehensive income (loss):
Other comprehensive income (loss) attributable to change from prior year		1,792			(10,177	)

Total recognized in net periodic benefit cost and other
comprehensive income (loss)	$	11,520		$	6,122

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are $0 thousand, $8,107 thousand and $0 thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2018, 2017 and 2016 were 3.62%, 4.16% and 4.38%, respectively. The rate of compensation increase used to determine the net periodic benefit cost for 2018, 2017 and 2016 was 4.00%. The expected long-term rate of return on plan assets was 7.00% for 2018 and was 7.50% for both 2017 and 2016 based on expected portfolio returns and allocations.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation for years end 2018, 2017 and 2016 were 4.27%, 3.62% and 4.16%, respectively.

The following table summarizes the accumulated benefit obligation for the periods indicated:


	At December 31,
(Dollars in thousands)	2018		2017
Qualified Plan	$	237,855	$	245,430
Non-qualified Plan		24,472		24,482
Total	$	262,327	$	269,912

(Some amounts may not reconcile due to rounding.)

The following table displays the plans with projected benefit obligations in excess of plan assets for the periods indicated:


	At December 31,
(Dollars in thousands)	2018		2017
Qualified Plan
Projected benefit obligation	$	275,772	$	291,720
Fair value of plan assets		260,531		210,267
Non-qualified Plan
Projected benefit obligation	$	24,472	$	24,482
Fair value of plan assets		-		-

The following table displays the plans with accumulated benefit obligations in excess of plan assets for the periods indicated:


	At December 31,
(Dollars in thousands)	2018		2017
Qualified Plan
Accumulated benefit obligation	$	-	$	245,430
Fair value of plan assets		-		210,267
Non-qualified Plan
Accumulated benefit obligation	$	24,472	$	24,482
Fair value of plan assets		-		-

The following table displays the expected benefit payments in the periods indicated:

(Dollars in thousands)
2019			14,772
2020			13,087
2021			11,137
2022			12,104
2023			12,779
Next 5 years			79,289

Plan assets consist of shares in investment trusts with 59%, 32%, 8% and 1% of the underlying assets consisting of equity securities, fixed maturities, limited partnerships and multi-strategy equity funds and cash, respectively. The Company manages the qualified plan investments for U.S. employees. The assets in the plan consist of debt and equity mutual funds. Due to the long term nature of the plan, the target asset allocation has historically been 70% equities and 30% bonds.

The following tables present the fair value measurement levels for the qualified plan assets at fair value for the periods indicated:


			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2018		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	2,872	$	2,872	$	-	$	-
Mutual funds, fair value
Fixed income (b)		82,633		82,633		-		-
Equities (c)		154,935		154,935		-		-
Total	$	240,440	$	240,440	$	-	$	-

(Some amounts may not reconcile due to rounding.)

(a)	This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.
(b)	This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 70% in U.S. securities and 30% in international securities.
(c)	This category includes funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately 50% in U.S. equities and 50% in international equities.

There were no transfers between Level 1 and Level 2 for the twelve months ended December 31, 2018.


			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(Dollars in thousands)	December 31, 2017		(Level 1)		(Level 2)		(Level 3)
Assets:
Short-term investments, which approximates fair value (a)	$	1,031	$	1,031	$	-	$	-
Mutual funds, fair value
Fixed income (b)		23,361		23,361		-		-
Equities (c)		159,578		159,578		-		-
Total	$	183,970	$	183,970	$	-	$	-

(Some amounts may not reconcile due to rounding.)

(a)	This category includes high quality, short-term money market instruments, which are issued and payable in U.S. dollars.
(b)	This category includes fixed income funds, which invest in investment grade securities of corporations, governments and government agencies with approximately 50% in U.S. securities and 50% in international securities.
(c)	This category includes funds, which invest in small, mid and multi-cap equity securities including common stocks, securities convertible into common stock and securities with common stock characteristics, such as rights and warrants, with approximately 90% in U.S. equities and 10% in international equities.

In addition, $20,091 thousand and $26,297 thousand of investments which were recorded as part of the qualified plan assets at December 31, 2018 and 2017, respectively, are not included within the fair value hierarchy tables as the assets are valued using the NAV practical expedient guidance within ASU 2015-07.

The Company contributed $77,000 thousand and $10,000 thousand to the qualified pension benefit plan for the years ended December 31, 2018 and 2017, respectively.

Defined Contribution Plans.

The Company also maintains both qualified and non-qualified defined contribution plans ("Savings Plan" and "Non-Qualified Savings Plan", respectively) covering U.S. employees. Under the plans, the Company contributes up to a maximum 3% of the participants' compensation based on the contribution percentage of the employee. The Non-Qualified Savings Plan provides compensating savings plan benefits for participants whose benefits have been curtailed under the Savings Plan due to Internal Revenue Code limitations. In addition, effective for new hires (and rehires) on or after April 1, 2010, the Company will contribute between 3% and 8% of an employee's earnings for each payroll period based on the employee's age. These contributions will be 100% vested after three years.

The following table presents the Company's incurred expenses related to these plans for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018		2017		2016
Incurred expenses	$	9,301	$	7,167	$	6,058

In addition, the Company maintains several defined contribution pension plans covering non-U.S. employees. Each non-U.S. office (Brazil, Canada, London, Belgium, Singapore, Ireland, Zurich and Bermuda) maintains a separate plan for the non-U.S. employees working in that location. The Company contributes various amounts based on salary, age and/or years of service. In the current year, the contributions as a percentage of salary for the branch offices ranged from 3.4% to 48.4%. The contributions are generally used to purchase pension benefits from local insurance providers. The following table presents the Company's incurred expenses related to these plans for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018		2017		2016
Incurred expenses	$	2,057	$	1,849	$	1,560

Post-Retirement Plan.

The Company sponsors a Retiree Health Plan for employees employed prior to April 1, 2010. This plan provides healthcare benefits for eligible retired employees (and their eligible dependants), who have elected coverage. The Company anticipates that most covered employees will become eligible for these benefits if they retire while working for the Company. The cost of these benefits is shared with the retiree. The Company accrues the post-retirement benefit expense during the period of the employee's service.

A medical cost trend rate of 7.25% in 2018 was assumed to decrease gradually to 4.50% in 2029 and then remain at that level.

Changes in the assumed healthcare cost trend can have a significant effect on the amounts reported for the healthcare plans. A one percent change in the rate would have the following effects on:


	Percentage		Percentage
	Point Increase		Point Decrease
(Dollars in thousands)	($ Impact)		($ Impact)
a. Effect on total service and interest cost components	$	577	$	(436	)
b. Effect on accumulated post-retirement benefit obligation		5,987		(4,643	)

The following table presents the post-retirement benefit expenses for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018		2017		2016
Post-retirement benefit expenses	$	1,829	$	2,814	$	2,293

The following table summarizes the status of this plan for the periods indicated:


	At December 31,
(Dollars in thousands)	2018			2017
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	34,717		$	32,071
Service cost		1,312			1,570
Interest cost		999			1,184
Amendments		-			(3,526	)
Actuarial (gain)/loss		(7,985	)		4,038
Benefits paid		(561	)		(619	)
Benefit obligation at end of year		28,483			34,717

Change in plan assets:
Fair value of plan assets at beginning of year		-			-
Employer contributions		561			619
Benefits paid		(561	)		(619	)
Fair value of plan assets at end of year		-			-

Funded status at end of year	$	(28,483	)	$	(34,717	)

Amounts recognized in the consolidated balance sheets for the periods indicated:


	At December 31,
(Dollars in thousands)	2018			2017
Other liabilities (due within one year)	$	(608	)	$	(655	)
Other liabilities (due beyond one year)		(27,875	)		(34,062	)
Net amount recognized in the consolidated balance sheets	$	(28,483	)	$	(34,717	)

(Some amounts may not reconcile due to rounding.)

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) for the periods indicated:


	At December 31,
(Dollars in thousands)	2018			2017
Accumulated income (loss)	$	(238	)	$	(8,317	)
Accumulated prior service credit (cost)		3,480			4,057
Accumulated other comprehensive income (loss)	$	3,242		$	(4,260	)

Other changes in other comprehensive income (loss) for the periods indicated are as follows:


	Years Ended December 31,
(Dollars in thousands)	2018			2017
Other comprehensive income (loss) at December 31, prior year	$	(4,260	)	$	(3,809	)
Net gain (loss) arising during period		7,985			(4,038	)
Prior Service credit (cost) arising during period		-			3,526
Recognition of amortizations in net periodic benefit cost:
Actuarial loss (gain)		94			192
Prior service cost		(577	)		(131	)
Other comprehensive income (loss) at December 31, current year	$	3,242		$	(4,260	)

Net periodic benefit cost included the following components for the periods indicated:


	Years Ended December 31,
(Dollars in thousands)	2018			2017			2016
Service cost	$	1,312		$	1,570		$	1,418
Interest cost		999			1,184			1,007
Prior service credit recognition		(577	)		(131	)		(132	)
Net gain recognition		94			192			-
Net periodic cost	$	1,829		$	2,814		$	2,293

Other changes recognized in other comprehensive income (loss):
Other comprehensive gain (loss) attributable to change from prior year		(7,502	)		451

Total recognized in net periodic benefit cost and
other comprehensive income (loss)	$	(5,673	)	$	3,265

(Some amounts may not reconcile due to rounding.)

The estimated transition obligation, actuarial loss and prior service credit that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $0 thousand, $0 thousand and ($577) thousand, respectively.

The weighted average discount rates used to determine net periodic benefit cost for 2018, 2017 and 2016 were 3.62%, 4.16% and 4.38%, respectively.

The weighted average discount rates used to determine the actuarial present value of the projected benefit obligation at year end 2018, 2017 and 2016 were 4.27%, 3.62% and 4.16%, respectively.

The following table displays the expected benefit payments in the years indicated:


(Dollars in thousands)
2019	$	608
2020		663
2021		740
2022		852
2023		944
Next 5 years		6,469