Travelers 2008 Annual Report Download - page 242

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
The Company has discretion regarding whether to provide additional funding and when to provide
such funding to its qualified pension plan. During 2008, the Company voluntarily made contributions
totaling $450 million to the qualified pension plan. The Company has not determined whether or not
additional funding will be made during 2009. There is no required contribution to the qualified pension
plan during 2009.
The pension plan projected benefit obligation divestiture of $17 million and the pension plan asset
divestiture of $12 million in 2007 was 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, 2008, 2007 and 2006.
Postretirement
Pension Plans Benefit Plans
(in millions) 2008 2007 2006 2008 2007 2006
Net Periodic Benefit Cost:
Service cost ................................... $77 $69 $64 $— $1 $ 2
Interest cost on benefit obligation ................... 117 111 108 15 16 16
Expected return on plan assets ..................... (158) (150) (148) (1) (1) (1)
Amortization of unrecognized:
Prior service benefit ........................... (6) (6) (6) ———
Net actuarial loss (gain) ........................ 849(3) (3) —
Net benefit expense .......................... $38 $28 $27 $11 $13 $ 17
Other Changes in Benefit Plan Assets and Benefit
Obligations Recognized in Accumulated Other Changes
in Equity from Nonowner Sources:
Prior service benefit ............................. $— $ — $ (20) $— $— $ —
Net actuarial loss (gain) .......................... 605 76 208 25 (1) (44)
Amortization of prior service benefit ................. 66————
Amortization of net actuarial (loss) gain .............. (8) (4) — 33—
Total other changes recognized in accumulated other
changes in equity from nonowner sources ........ 603 78 188 28 2 (44)
Total other changes recognized in net benefit expense
and accumulated other changes in equity from
nonowner sources ......................... $ 641 $ 106 $ 215 $39 $15 $(27)
The estimated net actuarial 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 $22 million and $(6) million, respectively. There is no
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