Pension and Postretirement Plans

12 Months Ended

Dec. 31, 2024

Retirement Benefits [Abstract]

Pension and Postretirement Plans

12.Pension and Postretirement Plans

Savings Plans

The Company sponsors several defined contribution plans covering substantially all employees. The Company's contributions to the plans are based on matching a portion of the employee contributions. Both employer and employee contributions are invested in various investment funds at the direction of the employee. Employer contributions to the defined contribution plans were $8.3 million in 2024, $8.0 million in 2023, and $7.6 million in 2022.

Pension and Postretirement Plans

Unrecognized actuarial net gains and losses for the Cincinnati Plans (defined below) and the Hawaii Plans (defined below) are primarily generated by differences between assumed and actual rates of return on invested assets, changes in discount rates and healthcare costs. Additionally, in Hawaii, a favorable amendment to the postretirement health and life insurance plan generated unrecognized gains in the twelve months ended December 31, 2022. Because gains and losses reflect refinements in estimates, as well as real changes in economic values, and because some gains in one period may be offset by losses in another or vice versa, we are not required to recognize these gains and losses in the periods that they occur. Instead, if the gains and losses exceed a 10% corridor defined in the accounting literature, the excess is amortized over a defined term. Unrecognized actuarial gains or losses that exceed 10% of the projected benefit obligation are amortized on a straight-line basis over the average life expectancy of the participant group for the Cincinnati pension plans and Hawaii pension plans, the average future working lifetime of active employees for the Cincinnati postretirement plans and the average remaining service period of active employees for the Hawaii postretirement plans. Additionally, the market-related value of assets is equal to the fair market value.

In 2024, the Company purchased a group annuity contract to transfer a portion of its pension liability and related responsibility for benefit payments of certain participants and beneficiaries within our existing defined benefit plans. Additionally, lump sum payments of $16.4 million resulting in a reduction of the benefit obligation of $16.4 million were made in the year ended December 31, 2024. The Company recorded a pension settlement gain of $3.5 million in 2024 as a result of the annuity purchases and the lump sum payments to the plan participants exceeding the sum of the service cost and the interest cost component of the net pension cost for each of the pension plans.

Cincinnati Plans

The Company sponsors three noncontributory defined benefit pension plans: one for eligible management employees, one for non-management employees, and one supplemental, nonqualified, unfunded plan for certain former senior executives (collectively the "Cincinnati Plans"). The management pension plan ("CBMPP") is a cash balance plan in which the pension benefit is determined by a combination of compensation-based credits and annual guaranteed interest credits. The non-management pension plan ("CBPP") is also a cash balance plan in which the combination of service and job-classification-based credits and annual interest credits determine the pension benefit. Benefits for the supplemental plan are based on eligible pay, adjusted for age and service upon retirement. We fund both the management and non-management plans in an irrevocable trust through contributions, which are determined using the traditional unit credit cost method. We also use the traditional unit credit cost method for determining pension cost for financial reporting purposes.

The Company also provides healthcare and group life insurance benefits for eligible retirees. As of October 1, 2023, healthcare benefits and other group life insurance benefits are funded through general funds of the Company. Prior to October 1, 2023, we funded healthcare benefits and other group life insurance benefits using Voluntary Employee Benefit Association ("VEBA") trusts. It is our practice to fund amounts as deemed appropriate from time to time. Contributions are subject to Internal Revenue Service ("IRS") limitations developed using the traditional unit credit cost method. The actuarial expense calculation for our postretirement health plan is based on numerous assumptions, estimates, and judgments including healthcare cost trend rates and cost sharing with retirees. Retiree healthcare benefits were phased out as of December 31, 2018 for all employees, with the exception of a small group of grandfathered employees. The postretirement health plan also includes liabilities associated with employees who have special death benefits only.

Hawaii Plans

The Company sponsors one noncontributory defined benefit plan for union employees, one cash balance pension plan for nonunion employees, and two postretirement health and life insurance plans for Hawaiian Telcom employees (collectively the "Hawaii Plans").

On December 31, 2023, the cash balance pension plan for nonunion employees ("HTMPP") under the Hawaii plans was merged into the management pension plan ("CBMPP") under the Cincinnati Plans. Pension plan assets and liabilities in the HTMPP were transferred to the CBMPP and remeasured at December 31, 2023.

During 2022, Hawaiian Telcom's pension plans made lump sum payments of $7.5 million resulting in a reduction of the plan benefit obligation of $7.5 million and a nominal pension settlement cost.

The postretirement health and life insurance plan was amended in the fourth quarter of 2022 to limit the amount of Medicare Part-B premium reimbursements to the standard amount resulting in an actuarial gain of $4.7 million recorded to “Accumulated other comprehensive income."

Components of Net Periodic Cost

The following information relates to noncontributory defined benefit pension plans, postretirement healthcare plans, and life insurance benefit plans for the years ended December 31, 2024, 2023 and 2022 for the Cincinnati Plans and the Hawaii Plans. In accordance with ASU 2017-07, only the service cost component of net benefit cost is eligible for capitalization, which was immaterial for the years ended December 31, 2024, 2023 and 2022.

Pension and postretirement costs (benefits) for these plans were comprised of:

	Pension Benefits									Postretirement and Other Benefits
(dollars in millions)	2024			2023			2022			2024			2023			2022
Service cost	$	—		$	—		$	—		$	0.4		$	0.5		$	0.8
Other components of pension and postretirement benefit plans expense:
Interest cost on projected benefit obligation		18.8			22.0			16.3			5.0			5.2			4.2
Expected return on plan assets		(21.0	)		(20.8	)		(27.5	)		—			—			—
Amortization of:
Prior service benefit		—			—			—			(0.8	)		(0.7	)		(0.2	)
Actuarial gain		(0.2	)		(0.3	)		—			(3.8	)		(4.7	)		(0.6	)
Pension settlement gain		(3.5	)		—			—			—			—			—
Pension/postretirement (benefit) cost	$	(5.9	)	$	0.9		$	(11.2	)	$	0.8		$	0.3		$	4.2

Amortization of prior service benefit and actuarial (gain) loss in the years ended December 31, 2024, 2023 and 2022 represent reclassifications from accumulated other comprehensive income.

The following are the weighted-average assumptions used in measuring the net periodic cost of the pension and postretirement benefits:

Cincinnati Plans	Pension Benefits									Postretirement and Other Benefits
	2024			2023			2022			2024			2023			2022
Discount rate		5.00	%		5.40	%		2.70	%		5.00	%		5.40	%		2.80	%
Expected long-term rate of return		6.30	%		6.00	%		5.80	%		—			—			—
Cash balance interest credit rate		4.00	%		4.00	%		4.00	%		—			—			—

Hawaii Plans	Pension Benefits									Postretirement and Other Benefits
	2024			2023			2022			2024			2023			2022
Discount rate		5.00	%		5.40	%		3.90	%		5.10	%		5.50	%		3.70	%
Expected long-term rate of return		6.00	%		5.50	%		5.00	%		—			—			—
Cash balance interest credit rate		—			5.10	%		1.90	%		—			—			—

The expected long-term rate of return on plan assets, developed using the building block approach, for each of the plans is based on the mix of investments held directly by the plans and the current view of expected future returns, which is influenced by historical averages. Changes in actual asset return experience and discount rate assumptions can impact the Company’s operating results, financial position and cash flows.

The Company utilized the Pri-2012/MP-2021 mortality tables published by the Society of Actuaries to measure the benefit obligations as of December 31, 2024 and 2023.

Benefit Obligation and Funded Status

Changes in the plans' benefit obligations and funded status are as follows:

	Pension Benefits						Postretirement and Other Benefits
(dollars in millions)	2024			2023			2024			2023
Change in benefit obligation:
Benefit obligation at beginning of period	$	433.7		$	439.5		$	102.1		$	102.4
Service cost		—			—			0.4			0.5
Interest cost		18.8			22.0			5.0			5.2
Plan Amendment		—			0.1			—			—
Actuarial (gain) loss (a) (b)		(13.0	)		8.8			(6.2	)		1.1
Benefits paid		(28.3	)		(36.7	)		(8.8	)		(9.1	)
Settlements (c)		(112.9	)		—			—			—
Other		—			—			1.9			2.0
Benefit obligation at end of period	$	298.3		$	433.7		$	94.4		$	102.1
Change in plan assets:
Fair value of plan assets at beginning of period	$	397.8		$	390.6		$	3.1		$	3.2
Actual return (loss) on plan assets		12.4			41.7			—			—
Employer contributions		2.7			2.2			6.4			6.9
Benefits paid		(28.3	)		(36.7	)		(6.6	)		(7.0	)
Settlements (c)		(112.9	)		—			—			—
Fair value of plan assets at end of period		271.7			397.8			2.9			3.1
Unfunded status	$	(26.6	)	$	(35.9	)	$	(91.5	)	$	(99.0	)

(a)The actuarial (gain) recorded for the year ended December 31, 2024 for the pension plans was primarily driven by an increase in the discount rate. The actuarial loss recorded during the year ended December 31, 2023 for the pension plans was primarily driven by a decrease in the discount rate.

(b)The actuarial (gain) recorded for the year ended December 31, 2024 for the postretirement plans was primarily driven by an increase in the discount rate. The actuarial loss recorded for the year ended December 31, 2023 for the postretirement plans was primarily driven by a decrease in the discount rate.

(c)Group annuity contracts and participant elections to take lump sum payments that exceeded the settlement accounting threshold and have been categorized as settlements.

The following are the weighted-average assumptions used in accounting for and measuring the projected benefit obligations:

Cincinnati Plans	Pension Benefits						Postretirement and Other Benefits
	December 31,						December 31,
	2024			2023			2024			2023
Discount rate		5.60	%		5.00	%		5.60	%		5.00	%
Cash balance interest credit rate		4.00	%		4.00	%		—			—

Hawaii Plans	Pension Benefits						Postretirement and Other Benefits
	December 31,						December 31,
	2024			2023			2024			2023
Discount rate		5.40	%		5.00	%		5.70	%		5.10	%
Cash balance interest credit rate		—			—			—			—

The assumed healthcare cost trend rate used to measure the postretirement health benefit obligation is shown below:

Cincinnati Plans	December 31,
	2024			2023
Healthcare cost trend		7.50	%		7.00	%
Rate to which the cost trend is assumed to decline (ultimate trend rate)		4.80	%		4.80	%
Year the rates reach the ultimate trend rate	2036			2033

The unfunded balance of the projected benefit obligation is recognized in the Consolidated Balance Sheets as follows:

	Pension Benefits				Postretirement and Other Benefits
	December 31,				December 31,
(dollars in millions)	2024		2023		2024		2023
Other noncurrent assets	$	2.1	$	2.1	$	—	$	—
Accrued payroll and benefits		1.4		1.5		7.7		7.9
Pension and postretirement benefit obligations		27.3		36.5		83.8		91.1
Total	$	26.6	$	35.9	$	91.5	$	99.0

Amounts recognized in "Accumulated other comprehensive income" in the Consolidated Balance Sheets which have not yet been recognized in net pension costs consisted of the following:

	Pension Benefits				Postretirement and Other Benefits
	December 31,				December 31,
(dollars in millions)	2024		2023		2024			2023
Prior service cost, net of tax of ($0.6), ($0.4)	$	—	$	—	$	(1.8	)	$	(1.2	)
Actuarial gain, net of tax of ($0.6), ($0.8), $9.5, $8.9		6.3		5.8		30.5			28.6
Total	$	6.3	$	5.8	$	28.7		$	27.4

Amounts recognized in "Accumulated other comprehensive income" on the Consolidated Statements of Equity (Deficit) and the Consolidated Statements of Comprehensive Income (Loss) are shown below:

	Pension Benefits						Postretirement and Other Benefits
(dollars in millions)	2024			2023			2024			2023
Prior service cost recognized:
Reclassification adjustments	$	—		$	—		$	(0.8	)	$	(0.8	)
Actuarial gain (loss) recognized:
Reclassification adjustments		(3.7	)		(0.3	)		(3.8	)		(4.7	)
Actuarial gain (loss) arising during the period		4.4			12.0			6.3			(0.8	)

Plan Assets, Investment Policies and Strategies

Cincinnati and Hawaii Plans

The primary investment objective for the trusts holding the assets of the pension and postretirement plans is preservation of capital with a reasonable amount of long-term growth and income without undue exposure to risk. The investment follows a glide path approach toward liability-driven investing that shifts a higher portfolio weighting to fixed income as the plan’s funded status increases. The current target allocations are 20% equity securities and 80% investment grade fixed income securities for the CBMPP assets, 30% equity securities and 70% investment grade fixed income securities for the CBPP assets, and 10% equity securities and 90% investment grade fixed income securities for the Hawaii union pension plan assets as a result of each plan's funded status. Equity securities are primarily held in the form of passively managed funds that seek to track the performance of a benchmark index. Equity securities include investments in growth and value common stocks of companies located in the United States, which represents approximately 50% of the equity securities held by the pension plans at December 31, 2024, as well as stock of international companies located in both developed and emerging markets around the world. Fixed income securities primarily include holdings of funds, which generally invest in a variety of intermediate and long-term investment grade corporate bonds from diversified industries and U.S. Treasuries. The postretirement plan assets held by the Cincinnati plan are currently invested in a group insurance contract.

The fair values of the pension plan assets at December 31, 2024 and 2023 by asset category are as follows:

(dollars in millions)	December 31, 2024		Quoted prices in active markets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Mutual funds
U.S. equity index funds	$	29.7	$	29.7	$	—	$	—
International equity index funds		28.9		28.9		—		—
Fixed income bond funds		212.0		212.0		—		—
Fixed income short-term money market funds		1.1		1.1		—		—
Group insurance contract		2.9		—		—		—
Total	$	274.6	$	271.7	$	—	$	—

(dollars in millions)	December 31, 2023		Quoted prices in active markets Level 1		Significant observable inputs Level 2		Significant unobservable inputs Level 3
Mutual funds
U.S. equity index funds	$	72.9	$	72.9	$	—	$	—
International equity index funds		72.6		72.6		—		—
Fixed income bond funds		252.0		252.0		—		—
Fixed income short-term money market funds		0.3		0.3		—		—
Group insurance contract		3.1		—		—		—
Total	$	400.9	$	397.8	$	—	$	—

The fair values of Level 1 investments are based on quoted prices in active markets.

The group insurance contract is valued at contract value plus accrued interest and has not been included in the fair value hierarchy but is included in the totals above.

Contributions to our qualified pension plans were $0.8 million in 2024, $0.2 million in 2023 and there were no contributions to our qualified pension plans in 2022. Contributions to our non-qualified pension plans were $1.9 million in 2024, $2.0 million in 2023, and $2.2 million in 2022.

Based on current assumptions, contributions are expected to be approximately $2 million to both the qualified plans and the non-qualified plans in 2025. Management expects to make cash payments of approximately $7 million related to its postretirement health plans in 2025.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years:

(dollars in millions)	Pension Benefits		Postretirement and Other Benefits		Medicare Subsidy Receipts
2025	$	37.9	$	7.8	$	(0.1	)
2026		33.0		7.7		(0.1	)
2027		31.1		7.7		(0.1	)
2028		29.3		7.5		(0.1	)
2029		26.1		7.4		—
Years 2030 - 2034		114.9		34.9		(0.1	)