THG 2018 Annual Report

The Company has recognized the funded status of its postretirement benefit plans in its Consolidated Balance Sheets. Since the plans are unfunded, the amount recognized in the Consolidated Balance Sheets is equal to the accumulated benefit obligation of the plans. The components of accumulated other comprehensive income or loss are reflected as either a net actuarial gain or loss or a net prior service cost. Obligation and Funded Status The following table reflects the funded status of these plans: DECEMBER 31 2018 2017 (in millions) Accumulated postretirement benefit obligation, beginning of year $ 10.1 $ 11.6 Interest cost 0.4 0.4 Net actuarial gain (0.9) (0.3) Benefits paid (1.2) (1.6) Accumulated postretirement benefit obligation, end of year 8.4 10.1 Fair value of plan assets, end of year ² ² Funded status of plans $ (8.4) $ (10.1) Benefit Payments The Company estimates that benefit payments over the next 10 years will be as follows: YEARS ENDING DECEMBER 31 (in millions) 2019 $ 1.1 2020 1.0 2021 0.9 2022 0.8 2023 0.8 2024 - 2028 3.1 7KH EHQHILW SD\PHQWV DUH EDVHG RQ WKH VDPH DVVXPSWLRQV XVHG WR PHDVXUH WKH &RPSDQ\¶V EHQHILW REOLJDWLRQ DW WKH HQG RI DQ d reflect benefits attributable to estimated future service. Components of Net Periodic Postretirement Expense (Benefit) The components of net periodic postretirement expense (benefit) were as follows: YEARS ENDED DECEMBER 31 2018 2017 2016 (in millions) Interest cost $ 0.4 $ 0.4 $ 0.5 Recognized net actuarial loss 0.2 0.2 0.2 Amortization of prior service cost (benefit) (0.3) (1.4) (1.4) Net periodic postretirement cost (benefit) $ 0.3 $ (0.8) $ (0.7) 7KH IROORZLQJ WDEOH UHIOHFWV WKH EDODQFHV LQ DFFXPXODWHG RWKHU FRPSUHKHQVLYH LQFRPH UHODWLQJ WR WKH &RPSDQ\¶V SRVWUHWLUHPHQW benefit plans: DECEMBER 31 2018 2017 (in millions) $ 2.5 $ 3.6 Net prior service cost (benefit) (0.1) (0.4) $ 2.4 $ 3.2 111 2018 ANNUAL REPORT | THE HANOVER INSURANCE GROUP