Retirement Benefit Arrangements

12 Months Ended

Dec. 31, 2011

Disclosure - Retirement Benefit Arrangements [Abstract]

Retirement Benefit Arrangements

17. Retirement Benefit Arrangements

For employee retirement benefits, the Company maintains certain defined contributions plans and other active and frozen defined benefit plans. The majority of the defined benefit obligation at December 31, 2011 relates to the active defined benefit plan for the Company's Zurich office employees (the Zurich Plan).

Defined Contribution Plans

Contributions are made by the Company, and in some locations, these contributions are supplemented by the local plan participants. Contributions are based on a percentage of the participant's base salary depending upon competitive local market practice and vesting provisions meeting legal compliance standards and market trends. The accumulated benefits for the majority of these plans vest immediately or over a four-year period. As required by law, certain retirement plans also provide for death and disability benefits and lump sum indemnities to employees upon retirement.

The Company incurred expenses for these defined contribution arrangements of $16.0 million, $14.8 million, and $13.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Active Defined Benefit Plan

The Company maintains the Zurich Plan, which is classified as a hybrid plan and accounted for as a defined benefit plan under U.S. GAAP. At December 31, 2011 and 2010, the funded status of the Zurich Plan was as follows (in thousands of U.S. dollars):

		2011		2010
Funded status
Unfunded pension obligation at beginning of year	$	17,144	$	9,117
Change in pension obligation
Service cost		7,141		5,683
Interest cost		3,308		3,020
Plan participants’ contributions		2,174		5,761
Actuarial loss		8,470		7,268
Benefits paid		(248)		(7,562)
Foreign currency adjustments		(850)		9,994
Settlements		(13,178)		—
Change in pension obligation		6,817		24,164
Change in fair value of plan assets
Actual return on plan assets		3,610		3,181
Employer contributions		6,627		6,025
Plan participants’ contributions		2,174		5,761
Benefits paid		(248)		(7,562)
Foreign currency adjustments		(186)		8,732
Settlements		(13,178)		—
Change in fair value of plan assets		(1,201)		16,137
Funded status
Unfunded pension obligation at end of year	$	25,162	$	17,144
Additional information:
Projected benefit obligation	$	121,156	$	114,339
Accumulated pension obligation		116,904		110,240
Fair value of plan assets		95,994		97,195

At December 31, 2011 and 2010, the funded status was included in accounts payable, accrued expenses and other in the Consolidated Balance Sheets. The total amounts recognized in accumulated other comprehensive (loss)income at December 31, 2011 and 2010 were $19.1 million (net of $5.1 million of taxes) and $15.2 million (net of $4.1 million of taxes), respectively.

The net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 were $10.0 million, $6.1 million and $6.0 million, respectively.

The investment strategy of the Zurich Plan's Pension Committee is to achieve a consistent long-term return, which will provide sufficient funding for future pension obligations while limiting risk. The expected long-term rate of return on plan assets is based on the expected asset allocation and assumptions concerning long-term interest rates, inflation rates and risk premiums for equities above the risk-free rates of return. These assumptions take into consideration historical long-term rates of return for the relevant asset categories. The investment strategy is reviewed regularly.

The fair values of the Zurich Plan's assets at December 31, 2011 and 2010 were equity funds (Level 1) of $nil and $4.3 million, respectively, and insured funds and cash (Level 2) of $96.0 million and $92.9 million, respectively. The equity funds are primarily publicly quoted open-end funds that invest in a full replication of European benchmark indices. The insured funds comprise the accumulated pension plan contributions and investment returns thereon, which are held in an insurance arrangement that provides at least a guaranteed minimum investment return. The insured funds are held by a collective foundation of AXA Life Ltd. and are guaranteed under the insurance arrangement.

The assumptions used to determine the pension obligation and net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 were as follows:

	2011					2010					2009
		Pension		Net periodic			Pension		Net periodic			Pension		Net periodic
		obligation		benefit cost			obligation		benefit cost			obligation		benefit cost
Discount rate		2.50	%	2.75	%		2.75	%	3.25	%		3.25	%	2.75	%
Expected return on plan assets		—		3.0			—		3.6			—		3.0
Rate of compensation increase		3.5		3.5			3.5		3.5			3.5		3.5

At December 31, 2011, estimated employer contributions to be paid in 2012 were $5.7 million and future benefit payments were estimated to be paid as follows (in thousands of U.S. dollars):

Period		Amount
2012	$	4,724
2013		4,666
2014		4,646
2015		5,190
2016		5,215
2017 to 2021		27,051

The Company does not believe that any plan assets will be returned to the Company during 2012.