THG 2018 Annual Report

The table below provides a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3). YEAR ENDED DECEMBER 31 2018 (in millions) Balance at beginning of period $ 25.7 Plus: Assets transferred from investments measured at fair value using NAV 2.1 Less: Assets transferred to Level 1 investments (2.7) Actual return on plan assets related to assets still held 0.7 Balance at end of year $ 25.8 Obligations and Funded Status The Company recognizes the current net underfunded status of its plans in its Consolidated Balance Sheets. Changes in the funded status of the plans are reflected as components of either net income or accumulated other comprehensive loss or income. The components of accumulated other comprehensive loss or income are reflected as either a net actuarial gain or loss or a net prior service cost. The following table reflects the benefit obligations, fair value of plan assets and funded status of the U.S. plans at December 31, 2018 and 2017. DECEMBER 31 U.S. Qualified Pension Plan U.S. Non-Qualified Pension Plan (in millions) 2018 2017 2018 2017 Change in benefit obligation: Benefit obligation, beginning of period (1) $ 501.2 $ 506.8 $ 36.6 $ 38.0 Interest cost 18.4 20.4 1.4 1.5 Actuarial losses (gains) (17.5) 7.3 (1.3) 0.1 Benefits paid (32.6) (33.3) (2.9) (3.0) Benefit obligation, end of year (1) 469.5 501.2 33.8 36.6 Change in plan assets: Fair value of plan assets, beginning of period 460.1 453.3 ² ² Actual return on plan assets (16.8) 40.1 ² ² Contributions 40.0 ² 2.9 3.0 Benefits paid (32.6) (33.3) (2.9) (3.0) Fair value of plan assets, end of year 450.7 460.1 ² ² Funded status of the plans $ (18.8) $ (41.1) $ (33.8) $ (36.6) (1) The accumulated benefit obligation for these plans is equal to the projected benefit obligation. 108 THE HANOVER INSURANCE GROUP | 2018 ANNUAL REPORT