EMPLOYEE BENEFIT PLANS

Certain subsidiaries of the Company are sponsors or administrators of both qualified and non-qualified defined benefit pension plans (“Pension Plans”). The largest of these plans is a non-contributory qualified defined benefit pension plan sponsored by RGA Reinsurance that covers U.S. employees. The benefits under the Pension Plans are generally based on years of service and compensation levels.

The Company also provides certain health care and life insurance benefits for retired employees. The health care benefits are provided through a self-insured welfare benefit plan. Employees become eligible for these benefits if they meet minimum age and service requirements. The retiree’s cost for health care benefits varies depending upon the credited years of service. The Company recorded benefits expense of approximately $9.1 million, $5.4 million, and $4.1 million in 2015, 2014 and 2013, respectively that are related to these postretirement plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement health benefits. Prepaid benefit costs and accrued benefit liabilities are included in other assets and other liabilities, respectively, in the Company’s consolidated balance sheets.

A December 31 measurement date is used for all of the defined benefit and postretirement plans. The status of these plans as of December 31, 2015 and 2014 is summarized below (dollars in thousands):



	December 31,
	Pension Benefits						Other Benefits
	2015			2014			2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	138,196		$	111,195		$	59,782		$	30,759
Service cost	9,222			8,121			4,062			2,354
Interest Cost	5,035			4,972			2,572			1,962
Participant contributions	—			—			229			174
Actuarial (gains) losses	(1,919		)	18,930			(2,729		)	25,354
Benefits paid	(4,480		)	(3,044		)	(609		)	(821		)
Foreign exchange translations and other adjustments	(3,815		)	(1,978		)	—			—
Benefit obligation at end of year	$	142,239		$	138,196		$	63,307		$	59,782



	December 31,
	Pension Benefits						Other Benefits
	2015			2014			2015			2014
Change in plan assets:
Fair value of plan assets at beginning of year	$	66,757		$	59,559		$	—		$	—
Actual return on plan assets	(2,795		)	2,489			—			—
Employer contributions	8,953			7,753			380			647
Participant contributions	—			—			229			174
Benefits paid and expenses	(4,480		)	(3,044		)	(609		)	(821		)
Fair value of plan assets at end of year	$	68,435		$	66,757		$	—		$	—
Funded status at end of year	$	(73,804	)	$	(71,439	)	$	(63,307	)	$	(59,782	)



	December 31,
	Qualified Plans						Non-Qualified Plans⁽¹⁾						Total
	2015			2014			2015			2014			2015			2014
Aggregate fair value of plan assets	$	68,435		$	66,757		$	—		$	—		$	68,435		$	66,757
Aggregate projected benefit obligations	83,870			80,104			58,369			58,092			142,239			138,196
Under funded	$	(15,435	)	$	(13,347	)	$	(58,369	)	$	(58,092	)	$	(73,804	)	$	(71,439	)


(1)	For non-qualified plans, there are no required funding levels.



	December 31,
	Pension Benefits				Other Benefits
	2015		2014		2015		2014
Amounts recognized in accumulated other comprehensive income:
Net actuarial loss	$	41,814	$	41,238	$	27,755	$	32,949
Net prior service cost	1,159		1,496		—		—
Total	$	42,973	$	42,734	$	27,755	$	32,949

The following table presents information for qualified and non-qualified pension plans with a projected benefit obligation in excess of plan assets as of December 31, 2015 and 2014 (dollars in thousands):



	2015		2014
Projected benefit obligation	$	142,239	$	138,196
Fair value of plan assets	68,435		66,757

The accumulated benefit obligations for all defined benefit pension plans were $140.4 million and $135.9 million at December 31, 2015 and 2014, respectively. The following table presents information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31, 2015 and 2014 (dollars in thousands):



	2015		2014
Accumulated benefit obligation	$	140,442	$	135,850
Fair value of plan assets	68,435		66,757

The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income were as follows (dollars in thousands):



	Pension Benefits									Other Benefits
	2015			2014			2013			2015			2014			2013
Net periodic benefit cost:
Service cost	$	9,222		$	8,121		$	8,023		$	4,062		$	2,354		$	1,881
Interest cost	5,035			4,972			4,072			2,572			1,962			1,353
Expected return on plan assets	(4,897		)	(4,471		)	(3,734		)	—			—			—
Amortization of prior actuarial losses	3,429			1,755			3,270			2,465			1,060			868
Amortization of prior service cost	309			333			373			—			—			—
Net periodic benefit cost	13,098			10,710			12,004			9,099			5,376			4,102
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Net actuarial (gains) losses	5,774			20,912			(11,250		)	(2,729		)	25,354			(5,949		)
Amortization of actuarial (gains) losses	(3,429		)	(1,755		)	(3,270		)	(2,465		)	(1,060		)	(868		)
Amortization of prior service cost (credit)	(309		)	(333		)	(373		)	—			—			—
Foreign exchange translations and other adjustments	(1,797		)	(578		)	(439		)	—			—			—
Total recognized in other comprehensive income	239			18,246			(15,332		)	(5,194		)	24,294			(6,817		)
Total recognized in net periodic benefit cost and other comprehensive income	$	13,337		$	28,956		$	(3,328	)	$	3,905		$	29,670		$	(2,715	)

The Company expects to contribute to the plans $14.3 million in pension benefits and $6.6 million in other benefits during 2016.

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid (dollars in thousands):



	Pension Benefits		Other Benefits
2016	$	10,993	$	753
2017	8,228		913
2018	8,141		1,095
2019	10,200		1,281
2020	9,533		1,535
2021-2025	57,489		11,534

The estimated net loss and prior service cost for the defined benefit pension plans and post-retirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $3.9 million and $1.7 million, respectively.

Assumptions

Weighted average assumptions used to determine the accumulated benefit obligation and net benefit cost or income were as follows:



	Pension Benefits						Other Benefits
	2015		2014		2013		2015		2014		2013
Discount rate used to determine benefit obligation	3.99	%	3.90	%	4.45	%	4.43	%	4.05	%	5.05	%
Discount rate used to determine net benefit cost or income	3.77	%	4.30	%	3.83	%	4.05	%	5.05	%	4.15	%
Expected long-term rate of return on plan assets	7.35	%	7.35	%	7.35	%	—	%	—	%	—	%
Rate of compensation increases	4.08	%	4.08	%	4.21	%	—	%	—	%	—	%

The expected rate of return on plan assets is based on anticipated performance of the various asset sectors in which the plan invests, weighted by target allocation percentages. Anticipated future performance is based on long-term historical returns of the plan assets by sector, adjusted for the long-term expectations on the performance of the markets. While the precise expected return derived using this approach may fluctuate from year to year, the policy is to hold this long-term assumption constant as long as it remains within reasonable tolerance from the derived rate. This process is consistent for all plan assets as all the assets are invested in mutual funds.

The assumed health care cost trend rates used in measuring the accumulated non-pension post-retirement benefit obligation were as follows:



	December 31,
	2015	2014
Pre-Medicare eligible claims	8% down to 5% in 2020	8% down to 5% in 2018
Medicare eligible claims	8% down to 5% in 2020	8% down to 5% in 2018

Assumed health care cost trend rates may have a significant effect on the amounts reported for health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects (dollars in thousands):



	One Percent Increase		One Percent Decrease
Effect on total of service and interest cost components	$	1,694	$	(1,226	)
Effect on accumulated postretirement benefit obligation	$	13,659	$	(10,254	)

Plan Assets

Target allocations of assets are determined with the objective of maximizing returns and minimizing volatility of net assets through adequate asset diversification and partial liability immunization. Adjustments are made to target allocations based on the Company’s assessment of the effect of economic factors and market conditions. The target allocations for plan assets are 60% equity securities and 40% debt securities as of December 31, 2015 and 2014. The Company’s plan assets are primarily invested in mutual funds. The mutual funds include holdings of S&P 500 securities, large-cap securities, mid-cap securities, small-cap securities, international securities, corporate debt securities, U.S. and other government securities, mortgage-related securities and cash.

Equity and debt securities are exposed to various risks, such as interest rate risk, credit risk, and overall market volatility. Due to the level of risk associated with certain investment securities, changes in the values of investment securities will occur and any change would affect the amounts reported in the financial statements.

The fair values of the Company’s pension plan assets as of December 31, 2015 and 2014 are summarized below (dollars in thousands):



	December 31, 2015
			Fair Value Measurement Using:
	Total		Level 1		Level 2		Level 3
Mutual Funds⁽¹⁾	$	68,349	$	68,349	$	—	$	—
Cash	86		86		—		—
Total	$	68,435	$	68,435	$	—	$	—


(1)	Mutual funds were invested 32% in U.S. equity funds, 38% in U.S. fixed income funds, 15% in non-U.S. equity funds and 15% in other.



	December 31, 2014
			Fair Value Measurement Using:
	Total		Level 1		Level 2		Level 3
Mutual Funds⁽²⁾	$	66,675	$	66,675	$	—	$	—
Cash	82		82		—		—
Total	$	66,757	$	66,757	$	—	$	—


(2)	Mutual funds were invested 32% in U.S. equity funds, 30% in U.S. fixed income funds, 22% in non-U.S. equity funds and 16% in other.

As of December 31, 2015 and 2014, the Company classified all of its pension plan assets in the Level 1 category as quoted prices in active markets are available for these assets. See Note 6 – “Fair Value of Asset and Liabilities” for additional detail on the fair value hierarchy.

Savings and Investment Plans

Certain subsidiaries of RGA also sponsor saving and investment plans under which a portion of employee contributions are matched. Subsidiary contributions to these plans, were $9.0 million, $7.8 million and $7.3 million in 2015, 2014 and 2013, respectively.