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Employee Retirement Benefits
 12 Months Ended
Dec. 31, 2022
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 $24 million, $22 million and $22 million during the years 2022, 2021 and 2020, 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 $8 million at
year-end 2022 and $9 million at year-end 2021, 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 $57 million and $64 million at December 31, 2022 and 2021, respectively. Company matching contributions to the CFC Top Hat Savings Plan totaled approximately $1 million for the years 2022, 2021 and 2020, 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
 2022202120222021
Discount rate5.34 %2.97 %5.42 %2.90 %
Rate of compensation increase4.50 
2.25-3.25
4.50 
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 2.37 percentage points for the qualified pension plan and by 2.52 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 was used for the years 2022 and 2021 and Scale MP-2020 was used for 2020.

This is a summary of the weighted-average assumptions used to determine our net periodic benefit cost for the plans:
 Qualified Pension PlanSERP
 202220212020202220212020
Discount rate2.97 %2.68 %3.40 %2.90 %2.52 %3.33 %
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 increased by 0.29 percentage points for the qualified pension plan and 0.38 percentage points for the SERP due to market interest rate conditions at the beginning of 2022. 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 2022 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 2022 was negative 8.9% and for 2021 was 24.5%. Our compensation increase assumptions in 2022 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,
20222021
Change in projected benefit obligation:  
Benefit obligation, January 1$362 $387 
Service cost9 10 
Interest cost10 10 
Actuarial gain(70)(5)
Benefits paid(29)(41)
Other— 1 
Projected benefit obligation, December 31$282 $362 
Change in plan assets:  
Fair value of plan assets, January 1$397 $357 
Actual return on plan assets(36)78 
Employer contribution— 3 
Benefits paid(29)(41)
Fair value of plan assets, December 31$332 $397 
Funded status, December 31$50 $35 
Accumulated benefit obligation$264 $338 
 
Our funded status for 2022 compared to 2021 improved primarily due to increases in actuarial gain from increases in discount rates, offset by lower year over year return on plan assets. 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.
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,
20222021
Pension amounts recognized in the consolidated balance sheets:
Other assets$50 $35 
Total$50 $35 
Pension amounts recognized in accumulated other comprehensive income:  
Net actuarial gain$36 $27 
Total$36 $27 
 
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,
202220212020
Net periodic benefit cost:
Service cost$9 $10 $9 
Non-service costs (benefit):
Interest cost10 10 12 
Expected return on plan assets(22)(21)(21)
Amortization of actuarial loss and prior service cost— 6 3 
Other(3)1 3 
Net periodic benefit cost$(6)$6 $6 
Other changes in plan assets and benefit obligations recognized in other
   comprehensive income:
Current year actuarial (gain) loss $(12)$(62)$38 
Amortization of actuarial gain (loss)3 (7)(6)
Current year prior service cost— 1 — 
Total recognized in other comprehensive (income) loss$(9)$(68)$32 
Total recognized in net periodic benefit cost and other comprehensive
   (income) loss		$(15)$(62)$38 
 
The 2022 change in the amount recognized in other comprehensive income from 2021 is largely due to changes in the actuarial gain resulting from increases in discount rates, offset by a decrease of return on plan assets.

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 2022, 2021 and 2020.
 
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 2022 we held approximately 85% of our pension portfolio in domestic common equity investments. The remainder of the portfolio consisted of 11% in United States government fixed-maturity
investments, 2% in both domestic corporate fixed-maturity investments and states, municipalities and taxable political subdivisions fixed-maturity investments. Our common equity portfolio consisted of 25% in the information technology sector, 19% in the financial sector, 16% in the healthcare sector, and 14% in the industrial sector, at year-end 2022. No additional sectors accounted for 10% or more of our common equity portfolio balance at year-end 2022.
 
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, 2022 and 2021. The following table shows the fair value hierarchy for those assets measured at fair value on a recurring basis at December 31, 2022 and 2021. Excluded from the table below is cash on hand of $43 million and $16 million at December 31, 2022 and 2021, respectively.
(Dollars in millions)Level 1Level 2Level 3Total
At December 31, 2022
Fixed maturities, available for sale:    
United States government$31 $— $— $31 
Corporate — 7 — 7 
States, municipalities and political subdivisions— 6 — 6 
Total fixed maturities, available for sale31 13 — 44 
Common equities245 — — 245 
Total$276 $13 $— $289 
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 
 
Our pension plan assets included 100,610 and 202,337 shares of the company’s common stock at December 31, 2022 and 2021, which had a fair value of $10 million and $23 million at December 31, 2022 and 2021, respectively. The defined benefit pension plan did not purchase any of our common stock during 2022 or 2021. The defined benefit pension plan sold 101,727 shares of our common stock during 2022 and did not sell any shares during 2021. The company paid less than $1 million in both 2022 and 2021 in cash dividends on our common stock to the pension plan.
 
We estimate $6 million of benefit payments from the SERP during 2023. 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,
202320242025202620272028 - 2032
Expected future benefit payments$57 $20 $23 $28 $27 $140