THG 2018 Annual Report

The unrecognized net actuarial gains (losses) which exceed 10% of the greater of the projected benefit obligation or the fair value of plan assets are amortized as a component of net periodic pension cost over the next five years. The total estimated amount of actuarial losses that will be amortized from accumulated other comprehensive income into net periodic pension cost in 2019 is $11.9 million. Contributions In accordance with ERISA guidelines, the Company is not required to fund its U.S. qualified benefit plan in 2019. The Company expects to contribute $3.1 million to its U.S. non-qualified pension plans to fund 2019 benefit payments. During 2018, the Company made a discretionary contribution of $40.0 million to its qualified benefit plan. At this time, no additional discretionary contributions are expected to be made into any of the U.S. plans during 2019, and the Company does not expect that any funds will be returned from the plans to the Company during 2019. Benefit Payments The Company estimates that benefit payments over the next 10 years will be as follows: YEARS ENDED DECEMBER 31 2019 2020 2021 2022 2023 2024-2028 (in millions) $ 38.5 $ 37.4 $ 38.7 $ 37.3 $ 37.1 $ 163.7 U.S. non-qualified pension plan $ 3.1 $ 3.0 $ 3.0 $ 2.9 $ 2.7 $ 12.4 7KH EHQHILW SD\PHQWV DUH EDVHG RQ WKH VDPH DVVXPSWLRQV XVHG WR PHDVXUH WKH &RPSDQ\¶V EHQHILW REOLJDWLRQV DW WKH HQG RI Benefit payments related to the qualified plan will be made from plan assets held in trust and not included with Company assets, whereas those payments related to the non-qualified plans will be provided for by the Company. DEFINED CONTRIBUTION PLAN In addition to the defined benefit plans, THG provides a qualified defined contribution 401(k) plan for its U.S. employees, whereby the Company matches employee elective 401(k) contributions, up to a maximum of 6% of eligible compensation in 2018, 2017, and 2016. 7KH &RPSDQ\¶V H[SHQVH IRU WKLV PDWFKLQJ SURYL sion was $21.7 million, $21.3 million and $21.4 million for 2018, 2017, and 2016, UHVSHFWLYHO\ ,Q DGGLWLRQ WR WKLV PDWFKLQJ SURYLVLRQ WKH &RPSDQ\ FDQ HOHFW WR PDNH DQ DQQXDO FRQWULEXWLRQ WR HPSOR\HHV¶ DFFR unts. Additional contributions amounted to $2.2 million and were contributed to the plan during 2017. Chaucer also provides a defined contribution plan for its employees which includes employer contributions. Prior to its sale, the &RPSDQ\¶V H[SHQVH LQFOXGHG $4.5 million, $4.8 million and $3.9 million for 2018, 2017 and 2016, respectively, related to these benefits; such costs are reflected in discontinued operations. 9. OTHER POSTRETIREMENT BENEFIT PLANS ,Q DGGLWLRQ WR WKH &RPSDQ\¶V SHQVLRQ SODQV WKH &RPSDQ\ KDV SRVWUHWLUHPHQW PHGLFDO EHQHILWV WKDW L t provides to former agents of its discontinued life businesses and retirees and their dependents. The plans, which are funded by the Company through either a Health 5HLPEXUVHPHQW $UUDQJHPHQW ³+5$´ RU GLUHFWO\ SURYLGH DFFHVV WR EHQHILWV LQFOXGLQJ KRVSLW al and major medical, with certain limits, and have varying co-payments and deductibles, depending on the plan. Generally, employees who were actively employed on December 31, 1995 became eligible with at least 15 years of service after the age of 40. Effective January 1, 1996, the Company revised these benefits so as to establish limits on future benefit payments to beneficiaries of retired participants and to restrict eligibility to then current employees. Effective January 1, 2018, the Plan was amended to further limit benefits and no longer provide benefits to current employees. Employees who retired prior to then were limited to a post-age 65 benefit. The population of agents receiving postretirement benefits was frozen as of December 31, 2002, when the Company ceased its distribution of proprietary life and annuity products. This plan is unfunded. 110 THE HANOVER INSURANCE GROUP | 2018 ANNUAL REPORT