Postretirement benefits

We maintain non-contributory defined pension benefit plans and other postretirement plans that cover certain employees located in the U.S., Europe, Asia, Canada, and Mexico. All underlying plans are subject to periodic actuarial valuations by qualified actuarial firms using actuarial models to calculate the expense and liability for each plan. Components of the funded status of the pension and other postretirement benefit plans are included in Accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets.

Chubb provides pension benefits to eligible employees and their dependents through various defined contribution plans and defined benefit plans sponsored by Chubb. With the acquisition, Chubb assumed the outstanding pension obligations of Chubb Corp which consisted of several non-contributory defined benefit pension plans covering substantially all its employees.

We also assumed the legacy Chubb Corp other postretirement benefits plans, principally health care and life insurance, to retired employees, their beneficiaries, and covered dependents. Health care coverage is contributory. Retiree contributions vary based upon retiree’s age, type of coverage, and years of service requirements. Life insurance coverage is non-contributory. Chubb funds a portion of the health care benefits obligation where such funding can be accomplished on a tax-effective basis. Benefits are paid as covered expenses are incurred.

As part of purchase accounting, Chubb eliminated legacy Chubb Corp’s postretirement benefit costs not yet recognized in Net income that were recorded in Accumulated other comprehensive income at the time of the acquisition. In addition Chubb conformed the accounting policies for the acquired plans of Chubb Corp to the accounting policy of Chubb to select the applicable discount rates using specific spot rates along a yield curve determined by the projected cash flows assumptions. This resulted in a lower overall discount rate used to determine the benefit obligation and therefore increased that obligation at the date of the acquisition.

At the date of the acquisition of Chubb Corp, we assumed the following postretirement benefit plan assets and obligations:



	Pension Benefits									Other Postretirement Benefits
	U.S. Plans			Non U.S. Plans			Total			U.S. Plans			Non U.S. Plans			Total
(in millions of U.S. dollars)	U.S. Plans			Non U.S. Plans			Total			U.S. Plans			Non U.S. Plans			Total
Fair value of plan assets	$	2,473		$	315		$	2,788		$	138		$	—		$	138
Benefit obligation	(3,153		)	(372		)	(3,525		)	(491		)	(15		)	(506		)
Funded status	$	(680	)	$	(57	)	$	(737	)	$	(353	)	$	(15	)	$	(368	)

Chubb’s funding policy is to contribute amounts that meet regulatory requirements plus additional amounts determined based on actuarial valuations, market conditions and other factors. All benefit plans satisfy minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA).

For the three months ended March 31, 2016, we contributed $27 million to our U.S. and non-U.S. pension and other postretirement benefits plans, and we estimate that we will contribute an additional $38 million for the remainder of 2016. These estimates are subject to change due to contribution decisions which are affected by various factors including our liquidity, market performance and management discretion.

The following table summarizes the components of net periodic benefit costs for our pension and postretirement benefit plans recognized in the consolidated statements of operations:



	Pension Benefits									Other Postretirement Benefits
(in millions of U.S. dollars)	U.S. Plans			Non-U.S. Plans			Total			U.S. Plans			Non-U.S. Plans		Total
Three months ended March 31, 2016
Net periodic benefit cost:
Service cost	$	17		$	5		$	22		$	2		$	—	$	2
Interest cost	27			8			35			5			—		5
Expected return on plan assets	(37		)	(10		)	(47		)	(2		)	—		(2		)
Amortization of unrecognized:
Net actuarial loss	—			1			1			—			—		—
Net periodic benefit cost	$	7		$	4		$	11		$	5		$	—	$	5
Three months ended March 31, 2015
Net periodic benefit cost:
Service cost	$	—		$	2		$	2
Interest cost	—			5			5
Expected return on plan assets	—			(7		)	(7		)
Amortization of unrecognized:
Net actuarial loss	—			1			1
Net periodic benefit cost	$	—		$	1		$	1

The weighted average assumptions used to determine net pension and other postretirement benefit costs were as follows:



	Pension Benefits				Other Postretirement Benefits
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
As of March 31, 2016
Discount rate	4.28	%	3.74	%	4.41	%	4.30	%
Rate of compensation increase	4.00	%	3.40	%	N/A		N/A
Expected long-term rate of return on plan assets	7.00	%	4.90	%	7.00	%	N/A
As of December 31, 2015
Discount rate	N/A		3.51	%	N/A		N/A
Rate of compensation increase	N/A		3.09	%	N/A		N/A
Expected long-term rate of return on plan assets	N/A		4.81	%	N/A		N/A