14. Benefit Plans

Pension plan amendment

Defined benefit pension plans cover most full-time employees, certain part-time employees and employee-agents. In July 2013, the Company approved and communicated to affected employees amendments to the plans effective January 1, 2014 to introduce a new cash balance formula to replace the current formulas (including the final average pay formula and the current cash balance formula) under which eligible employees accrue benefits.

In connection with the amendments, the Company remeasured the pension benefit obligations effective July 15, 2013, resulting in a decrease to unrecognized pension and other postretirement benefit cost in accumulated other comprehensive income of $599 million, after-tax. The decrease primarily reflects the new plan formula and an increase in the discount rate to 4.75% as of July 15, 2013 from 4.00% as of December 31, 2012. The expected long-term rate of return on plan assets of 7.75% for 2013 was unchanged. A settlement loss of $76 million, pre-tax, was recorded in net income in the Corporate and Other segment in the third quarter of 2013 as part of the remeasurement.

The Company will perform the annual remeasurement of the pension benefit obligations as of December 31, 2013. The remeasurement may include additional settlement losses of a comparable or greater amount depending on the level of lump sum benefit payments made in the fourth quarter of 2013.

Postretirement life insurance benefit amendment

The Company provides certain life insurance benefits for eligible employees hired before January 1, 2003 when they retire. In July 2013, the Company decided to eliminate this benefit effective January 1, 2014 for all current eligible employees and effective January 1, 2016 for all eligible retirees who retired after 1989. In connection with the amendment, the Company remeasured the postretirement benefit obligations effective July 15, 2013, resulting in a decrease to unrecognized pension and other postretirement benefit cost in accumulated other comprehensive income of $59 million, after-tax. The decrease primarily reflects the modified benefit applicability, partially offset by a decrease in the discount rate to 3.75% as of July 15, 2013 from 4.25% as of December 31, 2012. A curtailment of benefits occurs because the amendment eliminates benefits for all future services for current employees. Accordingly, a curtailment gain of $181 million, pre-tax, was recorded in net income in the Corporate and Other segment in the third quarter of 2013.

Components of Net Periodic Pension and Postretirement Benefit Costs

The components of net periodic cost for the Company’s pension and postretirement benefit plans are as follows:

($ in millions)		Three months ended September 30,						Nine months ended September 30,
		2013			2012			2013			2012
Pension benefits
Service cost	$	32		$	38		$	111		$	114
Interest cost		66			74			198			223
Expected return on plan assets		(100	)		(98	)		(293	)		(295	)
Amortization of:
Prior service credit		(12	)		(1	)		(13	)		(2	)
Net actuarial loss		54			45			184			134
Settlement loss		85			10			104			29
Net periodic pension cost	$	125		$	68		$	291		$	203

Postretirement benefits
Service cost	$	3		$	3		$	10		$	9
Interest cost		6			9			23			27
Amortization of:
Prior service credit		(5	)		(6	)		(17	)		(17	)
Net actuarial gain		(5	)		(5	)		(11	)		(15	)
Curtailment gain		(181	)		--			(181	)		--
Net periodic postretirement (credit) cost	$	(182	)	$	1		$	(176	)	$	4