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Employee Retirement Benefits
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Employee Retirement Benefits Employee Retirement Benefits
We sponsor a qualified defined benefit pension plan that we closed entry into for new associates as of June 30, 2008, and only participants 40 years of age or older as of August 31, 2008, could elect to continue to participate. During 2008, we changed the form of retirement benefit we offer some associates to a company match on contributions to a 401(k) plan as further explained below. For participants remaining in the pension plan, we continue to fund future benefit obligations. Benefits for the defined benefit pension plan are based on years of credited service and compensation level. Contributions are based on the prescribed method defined in the Pension Protection Act. Our net periodic benefit cost is based on certain actuarial assumptions and also is composed of several components that are determined using the projected unit credit actuarial cost method. The qualified plan has been amended to allow for distribution of vested balances to terminated participants.
 
We sponsor a defined contribution plan (401(k) plan) for eligible associates with matching company contributions totaling $22 million, $22 million and $19 million during the years 2021, 2020 and 2019, respectively. Associates who are not accruing benefits under the pension plan are eligible to receive the company match of up to 6% of cash compensation. Participants vest in the company match for the 401(k) plan after three years of eligible service.
 
We maintain a supplemental executive retirement plan (SERP) with a benefit obligation of $9 million at
year-end 2021 and $10 million at year-end 2020, which is included in the projected benefit obligation. The company also makes available to a select group of associates the CFC Top Hat Savings Plan, a nonqualified deferred compensation plan, which had a fair value of $64 million and $51 million at December 31, 2021 and 2020, respectively. Company matching contributions to the CFC Top Hat Savings Plan totaled approximately $1 million for the years 2021, 2020 and 2019, respectively.
 
Defined Benefit Pension Plan Assumptions
We evaluate our pension plan assumptions annually and update them as necessary. This is a summary of the weighted-average assumptions used to determine our benefit obligations at December 31 for the plans:
 Qualified Pension PlanSERP
 2021202020212020
Discount rate2.97 %2.68 %2.90 %2.52 %
Rate of compensation increase
2.25-3.25
2.25-3.25
2.25-3.25
2.25-3.25
 
To determine the discount rate for each plan, a theoretical settlement portfolio of high-quality rated corporate bonds was chosen to provide payments approximately matching the plan’s projected benefit payments. A single interest rate for each plan was determined resulting in a discounted value of the plan's benefit payments that equates to the market value of the selected bonds. The discount rate is reflective of current market interest rate conditions and our plan's liability characteristics. Based on this analysis, we increased the rate from the prior year by 0.29 percentage points for the qualified pension plan and by 0.38 percentage points for the SERP. Compensation increase assumptions reflect anticipated rates of inflation, real return on wage growth and merit and promotional increases. The mortality assumption is updated annually to reflect the updated mortality scales. The Pri-2012 tables with Scale MP-2021, Scale MP-2020, and Scale MP-2019 were used for the years 2021, 2020, and 2019, respectively. The updated mortality table did not have a significant impact on our consolidated financial statements as our qualified plan assumes the majority of benefits will be paid in the form of lump sums.

This is a summary of the weighted-average assumptions used to determine our net periodic benefit cost for the plans:
 Qualified Pension PlanSERP
 202120202019202120202019
Discount rate2.68 %3.40 %4.34 %2.52 %3.33 %4.25 %
Expected return on plan assets7.00 7.00 7.00 n/an/an/a
Rate of compensation increase
2.25-3.25
2.25-3.25
2.25-3.25
2.25-3.25
2.25-3.25
2.25-3.25
 
The discount rate was decreased by 0.72 percentage points for the qualified pension plan and 0.81 percentage points for the SERP due to market interest rate conditions at the beginning of 2021. The discount rate assumptions for our benefit obligation generally track with high-quality rated corporate bond yields chosen in our theoretical
settlement portfolio, and yearly adjustments reflect any changes to those bond yields. We believe the expected return on plan assets is representative of the expected long-term rate of return on these assets, which is consistent with 2021 expectations of interest rates and based partially on the fact that the plan’s common stock holdings pay dividends. We review historical actual return on plan assets when determining our expected long-term rate of return. Total portfolio return for 2021 was 24.5% and for 2020 was 11.4%. Our compensation increase assumptions in 2021 reflect anticipated rates of inflation, real return on wage growth and merit and promotional increases.
 
Benefit obligation activity using an actuarial measurement date for our qualified pension plan and SERP at December 31 follows:
(Dollars in millions)At December 31,
20212020
Change in projected benefit obligation:  
Benefit obligation, January 1$387 $350 
Service cost10 9 
Interest cost10 12 
Actuarial (gain) loss(5)51 
Benefits paid(41)(35)
Other1 — 
Projected benefit obligation, December 31$362 $387 
Change in plan assets:  
Fair value of plan assets, January 1$357 $354 
Actual return on plan assets78 34 
Employer contribution3 4 
Benefits paid(41)(35)
Fair value of plan assets, December 31$397 $357 
Funded status, December 31$35 $(30)
Accumulated benefit obligation$338 $360 
 
Our funded status for 2021 compared to 2020 improved primarily due to a higher return on plan assets and increases in actuarial gain from increases in discount rates. Effective January 1, 2021, the lump sum basis was changed from a Pension Benefit Guaranty Corporation (PBGC) rate, which is no longer being published by the PBGC after December 31, 2020, and mortality rates based on GAM83 tables with minor adjustments, to Internal Revenue Code (IRC) Section 417(e) interest rates and IRC Section 417(e) mortality rates, updated annually and projected into the future. The lump sum annual update resulted in an immaterial change at December 31, 2021, but the basis change resulted in an increase to our actuarial loss at December 31, 2020.
A reconciliation follows of the funded status for our qualified plan and SERP at the end of the measurement period to the amounts recognized in the consolidated balance sheets at December 31:
(Dollars in millions)At December 31,
20212020
Pension amounts recognized in the consolidated balance sheets:
Other assets (liability) $35 $(30)
Total$35 $(30)
Pension amounts recognized in accumulated other comprehensive income:  
Net actuarial (gain) loss$(27)$41 
Total$(27)$41 
 
Below are the components of our net periodic benefit cost, as well as other changes in plan assets and benefit obligations recognized in other comprehensive income for our qualified plan and SERP at December 31:
(Dollars in millions)Years ended December 31,
202120202019
Net periodic benefit cost:
Service cost$10 $9 $8 
Non-service costs (benefit):
Interest cost10 12 13 
Expected return on plan assets(21)(21)(20)
Amortization of actuarial loss and prior service cost6 3 1 
Other1 3 1 
Net periodic benefit cost$6 $6 $3 
Other changes in plan assets and benefit obligations recognized in other
   comprehensive income:
Current year actuarial (gain) loss $(62)$38 $(5)
Amortization of actuarial loss(7)(6)(2)
Current year prior service cost1 — — 
Total recognized in other comprehensive (income) loss$(68)$32 $(7)
Total recognized in net periodic benefit cost and other comprehensive
   (income) loss		$(62)$38 $(4)
 
The 2021 change in the amount recognized in other comprehensive income from 2020 is largely due to changes in the actuarial gain resulting from actual return on plan assets being greater than expected and increases in discount rates.

Service costs and non-service costs (benefit) are allocated in the same proportion primarily to underwriting, acquisition and insurance expenses line item with the remainder allocated to the insurance losses and contract holders' benefits line item on the consolidated statements of income for 2021, 2020 and 2019.
 
Defined Benefit Pension Plan Assets
The pension plan assets are managed to maximize total return over the long term while providing sufficient liquidity and current return to satisfy the cash flow requirements of the plan. The plan’s day-to-day investment decisions are managed by our internal investment department; however, overall investment strategies are discussed with our employee benefits committee. Our investment strategy is to weight our portfolio towards large-cap, high-quality, dividend-growing equities that we have historically favored. As our plan matures and interest rates normalize, we expect a greater allocation to fixed-income securities to better align asset and liability market risks. Our fixed-maturity bond portfolio is investment grade. The plan does not engage in derivative transactions.
 
Excluding cash, during 2021 we held approximately 87% of our pension portfolio in domestic common equity investments. The remainder of the portfolio consisted of 8% in United States government fixed-maturity investments, 3% in domestic corporate fixed-maturity investments and 2% in states, municipalities and taxable political subdivisions fixed-maturity investments. Our common equity portfolio consisted of 32% in the information technology sector, 20% in the financial sector, 13% in the healthcare sector, and 12% in the industrial sector, at year-end 2021. No additional sectors accounted for 10% or more of our common equity portfolio balance at year-end 2021.
 
Investments in securities are valued based on the fair value hierarchy outlined in Note 3, Fair Value Measurements. The pension plan did not have any liabilities carried at fair value during the years ended December 31, 2021 and 2020. The following table shows the fair value hierarchy for those assets measured at fair value on a recurring basis at December 31, 2021 and 2020. Excluded from the table below is cash on hand of $16 million and $31 million at December 31, 2021 and 2020, respectively.
(Dollars in millions)Quoted prices in
active markets for
identical assets (Level 1)		Significant other
observable inputs (Level 2)		Significant
unobservable
inputs
(Level 3)		Total
At December 31, 2021
Fixed maturities, available for sale:    
United States government$31 $— $— $31 
Corporate — 11 — 11 
States, municipalities and political subdivisions— 7 — 7 
Total fixed maturities, available for sale31 18 — 49 
Common equities332 — — 332 
Total$363 $18 $— $381 
At December 31, 2020    
Fixed maturities, available for sale:    
United States government$31 $— $— $31 
Corporate — 20 — 20 
States, municipalities and political subdivisions— 9 — 9 
Total fixed maturities, available for sale31 29 — 60 
Common equities266 — — 266 
Total$297 $29 $— $326 
 
Our pension plan assets included 202,337 shares of the company’s common stock at both December 31, 2021 and 2020, which had a fair value of $23 million and $18 million at December 31, 2021 and 2020, respectively. The defined benefit pension plan did not purchase any of our common stock during 2021 or 2020. The defined benefit pension plan did not sell any shares during 2021 and sold 29,776 shares of our common stock during 2020. The company paid less than $1 million in both 2021 and 2020 in cash dividends on our common stock to the pension plan.
 
We estimate $6 million of benefit payments from the SERP during 2022. We expect to make the following benefit payments for our qualified plan and SERP, reflecting expected future service:
(Dollars in millions)Years ended December 31,
202220232024202520262027 - 2031
Expected future benefit payments$29 $25 $27 $29 $34 $162