Travelers 2007 Annual Report Download - page 229

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
funding will be made during the next fiscal year. There is no required contribution to the qualified
pension plan during the next fiscal year.
The pension plan projected benefit obligation divestiture of $17 million and the pension plan asset
divestiture of $12 million is a result of the sale of the Mexican surety subsidiary, Afianzadora
Insurgentes, S.A. de C.V., by the Company in March 2007 and the transfer of certain assets in a 414(k)
transfer to the Travelers 401K Plan in the third quarter 2007. The 414(k) asset transfer was made as a
result of the Company’s review of the structure and investment options available under the pension
plan, and after recent changes in federal law governing tax-deferred IRA transfers for non-spouse
beneficiaries.
The following table summarizes the components of net periodic benefit cost and other amounts
recognized in accumulated other changes in equity from nonowner sources related to the benefit plans
for the years ended December 31, 2007, 2006 and 2005.
Postretirement
Pension Plans Benefit Plans
(in millions) 2007 2006 2005 2007 2006 2005
Net Periodic Benefit Cost:
Service cost .................................. $69 $64 $61 $1 $2 $ 4
Interest cost on benefit obligation .................. 111 108 103 16 16 19
Expected return on plan assets .................... (150) (148) (139) (1) (1) (2)
Amortization of unrecognized:
Prior service benefit .......................... (6) (6) (6) ———
Net actuarial loss (gain) ....................... 491(3) ——
Net benefit expense ......................... $28 $27 $20 $13 $17 $ 21
Other Changes in Benefit Plan Assets and Benefit
Obligations Recognized in Accumulated Other Changes
in Equity from Nonowner Sources:
Prior service benefit ............................ $— $ (20) $N/A $— $ — $N/A
Net actuarial loss (gain) ......................... 76 208 N/A (1) (44) N/A
Amortization of prior service benefit ................ 6— N/A —— N/A
Amortization of net actuarial (loss) gain ............. (4) — N/A 3— N/A
Total other changes recognized in accumulated other
changes in equity from nonowner sources ....... 78 188 N/A 2(44) N/A
Total other changes recognized in net benefit expense
and accumulated other changes in equity from
nonowner sources ........................ $ 106 $ 215 $N/A $15 $(27) $N/A
N/A—Not applicable.
The estimated net loss (gain) and prior service benefit for the defined benefit pension plans that
will be amortized from other changes in equity from nonowner sources into net periodic benefit cost
over the next fiscal year are $8 million and $(6) million, respectively. The estimated net loss (gain) and
prior service cost for the postretirement benefit plans that will be amortized from other changes in
equity from nonowner sources into net periodic benefit cost over the next fiscal year are $(3) million
and $0 million, respectively.
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