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Notes to Consolidated Financial Statements (Continued)
(21) Pension plans (Continued)
The net funded status is recognized in the Consolidated Balance Sheets as follows (in millions).
December 31,
2013 2012
Accounts payable, accruals and other liabilities .................................................. $1,287 $3,441
Losses and loss adjustment expenses .......................................................... 309 256
Other assets .............................................................................. (975) (60)
$ 621 $3,637
Fair value measurements of Plan assets as of December 31, 2013 and 2012 follow (in millions).
Total
Fair Value
Quoted Prices
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31, 2013
Cash and equivalents ...................................... $ 595 $ 355 $ 240 $—
Equity securities .......................................... 7,844 7,684 160 —
Government obligations .................................... 891 607 284 —
Other fixed maturity securities ............................... 901 81 820 —
Investment funds and other ................................. 3,046 577 2,156 313
$13,277 $9,304 $3,660 $313
December 31, 2012
Cash and equivalents ...................................... $ 900 $ 345 $ 555 $—
Equity securities .......................................... 5,444 5,211 233 —
Government obligations .................................... 899 529 370 —
Other fixed maturity securities ............................... 790 92 698 —
Investment funds and other ................................. 2,403 419 1,652 332
$10,436 $6,596 $3,508 $332
Refer to Note 18 for a discussion of the three levels in the hierarchy of fair values. Plan assets measured at fair value with
significant unobservable inputs (Level 3) for the years ending December 31, 2013 and 2012 consisted primarily of real estate
and limited partnership interests. Plan assets are generally invested with the long-term objective of earning amounts sufficient to
cover expected benefit obligations, while assuming a prudent level of risk. Allocations may change as a result of changing
market conditions and investment opportunities. The expected rates of return on Plan assets reflect subjective assessments of
expected invested asset returns over a period of several years. Generally, past investment returns are not given significant
consideration when establishing assumptions for expected long-term rates of returns on Plan assets. Actual experience will
differ from the assumed rates.
Benefits payments expected over the next ten years are as follows (in millions): 2014 – $787; 2015 – $802; 2016 – $805;
2017 – $816; 2018 – $823; and 2019 to 2023 – $4,253. Sponsoring subsidiaries expect to contribute $276 million to defined
benefit pension plans in 2014.
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