Pension

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Pension

Note 18 – Pension

A.About Our Plans

The Company sponsors U.S. and non-U.S. defined benefit pension plans; future benefit accruals for the domestic plans are frozen.

Accounting policy. The Company measures the assets and liabilities of its domestic pension plans as of December 31. Benefit obligations are measured at the present value of estimated future payments based on actuarial assumptions. The Company uses the corridor method to account for changes in the benefit obligation when actual results differ from those assumed, or when assumptions change. These changes are called net unrecognized actuarial gains (losses). Under the corridor method, net unrecognized actuarial gains (losses) are initially recorded in Accumulated other comprehensive loss. When the unrecognized gain (loss) exceeds 10% of the

benefit obligation, that excess is amortized to expense over the expected remaining lives of plan participants. The net plan expense is reported in Interest expense and other in the Consolidated Statements of Income.

For balance sheet purposes, we measure plan assets at fair value. When the actual return differs from the expected return, those differences are reflected in the net unrealized actuarial gain (loss) discussed above. However, to measure pension benefit costs, we use a market-related asset valuation that differs from the actual fair value for domestic pension plan assets invested in non-fixed income investments. The market-related value recognizes the difference between actual and expected long-term returns in the portfolio over five years, a method that reduces the short-term impact of market fluctuations on pension costs. The market-related asset value was approximately $4.0 billion, compared with a fair value of approximately $4.1 billion at December 31, 2023.

B.Funded Status and Amounts Included in Accumulated Other Comprehensive Loss

The following table summarizes the projected benefit obligations and assets related to our U.S. and non-U.S. pension plans:

	For the Years Ended December 31,
(In millions)	2023		2022
Change in benefit obligation
Benefit obligation, January 1	$	3,948	$	5,223
Service cost	1		2
Interest cost	204		140
Actuarial losses (gains), net (1)	93		(1,094)
Benefits paid from plan assets	(294)		(296)
Other	(18)		(27)
Benefit obligation, December 31	3,934		3,948
Change in plan assets
Fair value of plan assets, January 1	4,186		4,846
Actual return on plan assets	246		(366)
Benefits paid	(294)		(296)
Contributions	—		2
Fair value of plan assets, December 31	4,138		4,186
Funded status	$	204	$	238
Amounts presented in Consolidated Balance Sheets
Other assets	$	204	$	238

(1) 2023 losses reflect a decrease in the discount rate while 2022 gains reflect an increase in the discount rate.

We fund our qualified pension plans at least at the minimum amount required by the Employee Retirement Income Security Act of 1974 and the Pension Protection Act of 2006. The Company made immaterial contributions to the qualified pension plans in 2023. For 2024, contributions to the qualified pension plans are expected to be immaterial. Future years' contributions will ultimately be based on a wide range of factors including but not limited to asset returns, discount rates and funding targets. Non-qualified pension plans are generally funded on a pay-as-you-go basis as there are no plan assets for these plans.

Benefit payments. The following benefit payments are expected to be paid in:

(In millions)
2024	$	319
2025	$	316
2026	$	317
2027	$	314
2028	$	311
2029 - 2033	$	1,484

Amounts reflected in the pension assets/(liabilities) shown above that have not yet been reported in Net income and, therefore, have been included in Accumulated other comprehensive loss consisted of the following:

(In millions)	December 31, 2023		December 31, 2022
Unrecognized net (losses)	$	(1,207)	$	(1,208)
Unrecognized prior service cost	(4)		(5)
Postretirement benefits liability adjustment	$	(1,211)	$	(1,213)

C.Cost of Our Plans

Net pension cost was as follows:

	For the Years Ended December 31,
(In millions)	2023		2022		2021
Service cost	$	1	$	2	$	2
Interest cost	204		140		132
Expected long-term return on plan assets	(204)		(272)		(269)
Amortization of:
Prior actuarial losses, net	52		89		78
Settlement loss	—		—		4
Net (benefit) cost	$	53	$	(41)	$	(53)

D.Assumptions Used for Pension

	For the Years Ended December 31,
	2023	2022
Discount rate:
Pension benefit obligation	5.10%	5.43%
Pension benefit cost	5.43%	2.82%
Expected long-term return on plan assets:
Pension benefit cost	6.50%	6.75%
Mortality table for pension obligations	White Collar mortality table with MP 2021 projection scale	White Collar mortality table with MP 2021 projection scale

The Company develops discount rates by applying actual annualized yields for high-quality bonds by duration to the expected pension plan liability cash flows. The bond yields represent a diverse mix of actively traded high quality fixed income securities that have an above average return at each duration as management believes this approach is representative of the yield achieved through plan asset investment strategy.

The expected long-term return on plan assets was developed considering historical long-term actual returns, expected long-term market conditions, plan asset mix and management's plan asset investment strategy.

E.Pension Plan Assets

As of December 31, 2023, pension assets included $4.0 billion invested in the separate accounts of Connecticut General Life Insurance Company, a subsidiary of the Company, and an additional $0.1 billion invested in funds of unaffiliated investment managers.

The fair values of pension assets by category are as follows:

(In millions)	December 31, 2023		December 31, 2022
Debt securities:
Federal government and agency	$	12	$	11
Corporate	2,780		2,349
Asset-backed	121		109
Fund investments	278		478
Total debt securities	3,191		2,947
Equity securities:
Domestic	27		89
International, including funds and pooled separate accounts (1)	6		35
Total equity securities	33		124
Securities partnerships	419		452
Real estate funds, including pooled separate accounts (1)	270		315
Commercial mortgage loans	46		63
Guaranteed deposit account contract	48		50
Cash equivalents and other current assets, net	131		235
Total pension assets at fair value	$	4,138	$	4,186

(1) A pooled separate account has several participating benefit plans and each owns a share of the total pool of investments.

The Company's current target investment allocation percentages are 90% fixed income and 10% in other investments, including private equity (securities partnerships), public equity securities, and real estate, and are developed by management as guidelines, although the fair values of each asset category are expected to vary as a result of changes in market conditions. The Company will evaluate further allocation changes to equity securities, other investments and fixed income securities as funding levels change.

See Note 13 for further details regarding how fair value is determined, including the level within the fair value hierarchy and the procedures we use to validate fair value measurements. The Company classifies substantially all debt securities in Level 2 for pension plan assets. These assets are valued using recent trades of similar securities or are fund investments priced using their daily net asset value that is the exit price. All domestic equity securities and international equity funds within pension assets are classified as Level 3.

Securities partnerships, real estate and hedge funds are valued using net asset value as a practical expedient and are excluded from the fair value hierarchy. See Note 13 for additional disclosures related to these assets invested in the separate accounts of the Company's subsidiary. Certain securities as described in Note 13, as well as commercial mortgage loans and guaranteed deposit account contracts, are classified in Level 3 because unobservable inputs used in their valuation are significant.

F.401(k) Plan

The Company sponsors a 401(k) plan. All employees are immediately eligible for the plan at hire and the Company matches a portion of employees' contributions to the plan. Participants in the plan may invest in various funds that invest in the Company's common stock, several diversified stock funds, a bond fund or stable value funds. The Company common stock fund under the plan constitutes an "employee stock ownership plan" as defined in the Internal Revenue Code. Dividends from the Company common stock fund are reinvested in a participant's stock fund account unless the participant elects to receive the dividends in cash.

The Company may elect to increase its matching contributions if the Company's annual performance meets certain targets. The Company's annual expense for the plan was as follows:

	For the Years Ended December 31,
(In millions)	2023		2022		2021
Expense	$	296	$	274	$	268