Employee Benefit Plans

3 Months Ended

Mar. 31, 2017

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

Note 9 – Employee Benefit Plans

Net periodic cost related to the Company’s defined benefit pension and supplemental benefit plans includes the following components:

	Three Months Ended March 31,
(in thousands)	2017			2016
Expense:
Service costs	$	184		$	261
Interest costs		4,641			5,964
Expected return on plan assets		(2,370	)		(3,094	)
Amortization of net actuarial loss		6,933			7,037
Amortization of prior service credit		(1,211	)		(1,211	)
	$	8,177		$	8,957

Pension termination and settlement

In May 2016, the Company’s board of directors terminated the Company’s funded defined benefit pension plan known as the First American Financial Corporation Pension Plan, effective as of July 31, 2016.  The pension plan was closed to new entrants effective December 31, 2001 and amended to “freeze” all benefit accruals as of April 30, 2008.  Also, in May 2016, a subsidiary of the Company terminated its small regional funded defined benefit pension plan effective as of August 31, 2016.  All financial impacts discussed below reflect the termination of both pension plans.

The pension plans offer participants annuity payments based on a number of factors and, for certain participants, an alternative lump sum distribution option.  During 2016, the Company offered the lump sum distributions to certain participants, which were settled by the pension plans in the fourth quarter.  The Company made additional cash contributions in 2016 of $84.8 million above scheduled amounts and recognized $66.3 million in settlement costs during the fourth quarter of 2016 related to distributions of pension plan assets totaling $127.2 million to participants electing lump sum payments.  

The Company made cash contributions of $34.0 million in March 2017 to fully fund its pension obligation and expects the transfer of its remaining liabilities related to the pension plans to be completed in the second quarter of 2017.  Upon completion, the Company expects to recognize $159 million of pension expense in the condensed consolidated statements of income.